It’s estimated that there will be 1.92 billion global digital buyers in 2019 and the number is set to increase rapidly in the upcoming years. The growing opportunities in the world of online sales has led to a mad rush among e-commerce businesses owners to capture a significant market share. Moreover, mobile ecommerce sales are projected to make up to 63.5% of total ecommerce sales in 2019. This is why most e-commerce business owners are leaning on mobile apps to meet their goals. Not only does mobile-commerce makes the shopping experience more handy and accessible for shoppers, it benefits businesses by omitting a need for shelf space. One of the basic components of a good online shopping mobile app is a payment gateway.
In this blog, we focus on explaining what is a payment gateway and how they function in a mobile app, types of payment and methods by which they can be integrated in an app. We will also explain the advantages and disadvantages of all types before we proceed to share with you a concise list of payment gateways that are popular among developers.
Payment gateways are software that allow online stores to conduct electronic transactions for the business. They can be easily integrated into e-commerce websites and even m-commerce apps. The payment gateways also ease processing of online transactions between a business and it’s customers. They are the essential mediators that bring together customers and sellers who want to indulge in a business transaction through a mobile app or website. Payment gateways omit the need for direct interaction between the app and payment processors using encryption to ensure the secure processing of sensitive customer’s data. Most payment gateways are compatible with popular financial systems like Visa, MasterCard and American Express etc. These gateways are well equipped with the ability to verify user data with great accuracy. While payment gateway solutions ease the payment processing a great deal, they are an optional component of a mobile app. They need to be used for the security features they bring to the app which prevent frauds and extend the online payment functionalities.
All mobile apps that feature payment gateways depend on sturdy internet connectivity.
Step I: A user adds items/services to his e-cart which is linked to a payment gateway provider.
Step II: The user completes the purchase using ‘Pay’ button, the app leads you to a page that requires some financial details.
Step III: The users are then required to fill in a bank account or card details.
Step IV: Once the user fills in the details and submits them, the gateway sends a request to the bank that issued the user’s credit or debit card.
Step V: The bank approves the payment request through the payment system after thorough analysis and verification. It sends back an approval code.
Step VI: After the transaction gets accepted by the system, an authorized code is sent by the bank issuer to the seller.
Step VII: Finally, all this lead to a debit on the customer’s account which is reflected as a credit on the seller’s account.
Seller Account Types
Seller accounts allow one to accept online payments. They can be viewed as an online bank account of an m-commerce business. They tend to temporary holds the money received from sale on the app and then transfer them to a regular business bank account. It is easy to open merchant accounts in banks and integrate them with payment gateways. Sellers can also use one of credit card payment gateway providers giving customers all-in-one solution and support merchant accounts. Depending on the needs of the business; a seller can opt from two types of accounts:
a.) Dedicated Merchant Account
In case the mobile app business is run by an individual business owner, they can do with a dedicated merchant account. Being a tad bit pricier than the other type of seller account and can strain a small budget business. However, the hefty price tag offers exclusive features like customer request adjustment and quicker transactions etc. While app payment providers have different fee structures, the seller has complete control over funds and expenses here.
b.) Aggregated Merchant Account
This type of seller account is the more popular kind among mobile app business merchants. It stores all funds including other people’s money. Business merchants are required to give some personal information for opening an aggregated merchant account. Although the transactions involved are simpler in nature but they take longer to complete as compared to dedicated accounts.
Type of Items being Sold
Nature of the product or services being sold dictate the choice of the payment gateways in a mobile app business. Payment processing methods vary in cases when a seller is selling physical goods as against one selling digital goods or services. All payment methods are legit when a seller is selling physical goods, however the same can not be claimed for digital goods. Digital goods are not sold through third-party payment services on the app stores. Sellers of digital content often deal with Play Store or App Store policies for in-app purchases. Both companies provide developers with guidelines, tech support and appropriate tool. A transaction involving the sale of digital goods require users to enter platform-specific account Ids.
Integrating payment gateways into a mobile app makes a seller responsible for the security of user’s data. A PCI DSS compliance certificate gives the seller the authority for this and needs to be purchased beforehand. The mobile app needs to feature an information system designed specifically for storing the card data of the user. The design is then audited by PCI certified security standard council company.
After a customer shops on an m-commerce store, he adds items to his/her m-cart. The cart on the mobile app is linked to a payment gateway and the details of the transaction are stored in the merchant’s account.
1.) Credit/Debit Card Payment Gateway Integration
Often payment gateway providers allow the usage of debit/credit cards for transactions. The API of the mobile application is used for this process. Integrating credit and debit cards into mobile app ease the purchase process for the users. However, while integrating the API, the seller has to take care of the security of every digital transaction. In an ideal case scenario, the payment gateway API would send back a token the seller’s server’s secure authenticated environment. This token would represent the submitted card data and can be used to execute actual transactions. However, in reality, not all payment gateways support an authenticated tokenization process. Payment gateway providers like Stripe and Braintree offer native libraries for both Apple and Android app owners.
2.) PCI for Payments
A business that seeks to collect payments online needs to strictly adhere to the Payment Card Industry Data Security Standard (PCI-DSS). All mobile app businesses which seek to accept credit card payments or even the ones with mobile payment system integration needs to comply with PCI-DSS rules. You need to choose payment gateway providers that help you easily integrate mobile payment capabilities while avoiding most PCI-DSS compliance concerns because sensitive credit card data skips your servers. Non-compliance with PCI-DSS can result in data breaches, card replacement costs and other undesirable consequences for sellers and buyers both. PCI’s offer top-notch security for user’s data, it encrypts the data on the card for a legit fees. The fees vary according to the size of the business, and can range from USD$ 1000- USD$ 50000 annually.
3.) SDK to Integrate Payment Gateways
Every payment gateway provider offers its SDKs. Log on to the official website of your payment gateway provider to know more about the SDK they offer. The SDKs often consist of strong mobile libraries. These libraries ease the software development process by processing credit card data. Thus it saves time involved in the integration and omits the headache of PCI compliance. The SDKs also help sellers create payment forms for collecting user data. In case you own a mobile app sells digital content, have your team work out a platform-specific payment gateway solutions.
A.) PayPal Payments Pro
PayPal is the most popular payment integration method for e-commerce sites and mobile apps. Merchants who have no experience with such things find it easiest to use. PayPal Payment Pro allows one to create a personal account and then link it your online store or software. The transaction fee charged is 2.9% of the amount excluding $0.30. It is a widely used service globally and has a subscriber base of over 100 million subscribers.
Stripe is easily the second most popular e-cash payment gateway service. The distinct features offered by Stripe include web-hosting journal, administrative panel access and enhanced security. The price charged by Stripe for each transaction is 2.9% plus a fixed fee. The gateway comes with detailed documentation and is fairly easy to integrate with mobile applications.
Authorize.net is an old horse. It provides services like virtual POS, as well as eCheck processing along with other features. Easy integration is one of the best part of authorize.net. It has a large base of users in US and provides a host of features for merchants to track their payments.
Braintree comes with built-in fraud protection, payouts in two days, and live customer support. It also features software development kits (SDK) written in seven programming languages, featuring iOS and Android support. The gateway charges a fee of 2.9% + $0.30 per transaction after the store earnings exceeded $50K.
No matter what you are trying to sell through a mobile app, you can use a payment gateway to simplify the payment procedure for your customers. 26% of carts are abandoned due to long and complex checkout process. A simplified and easy to navigate payment process can give the business an edge over others.
At Promatics, we have wide experience in working on mobile apps with well-integrated payment gateways. If you have an app idea and are clueless about where to begin or if you have an app but are confused about the payment gateway to choose, we would be happy to help! Write to our team of mobile app tech experts and ask for a free quote.
Promatics is an ISO 9001:2008 certified offshore web and mobile application development company with a strong team of 100+ highly skilled IT experts delighting SMEs across USA, Europe and APAC. Our services and solutions help clients to achieve tangible business value and remain competitive in today’s evolving marketplaces.