Payment Options for Export Import Trade Part X - How to Select a Payment Gateway Service

Success of your e-business depends a great deal on payment gateway service. Apart from quality and cost of service - defective payment gateway may cost you customer, order, loss due to fraud etc.

Here's a quick guide on how to select a payment gateway service that suits your purpose


Safety and security of transaction is one of the most important factors in the selection of on-line payment gateway service. Most basic requirement of any payment gateway is Verisign 128 bit Digital Certificate. Apart from that, physical and datcenter security, OS and Application security, Firewall and Intrusion Detection Systems at the OS and Application layer, Database security are some of the security aspects one should check before selecting a payment gateway. A secure system will not only ensure safety of your transaction but financial information of your customer also. Any weakness on this aspect may adversely affect customer's confidence, leading to loss of order.

Fraud Detection

The Payment Gateway should have advanced fraud detection system that not only does basic security checks like AVS or CVV (Verified by VISA) - but also scans for various transaction discrepancy like billing address mismatch, suspect IP, using multiple cards from same computer etc. Loss due to fraudulent credit card in on-line business could be very significant and the only person who bears the cost is Merchant (i.e. you).

Transaction Features

Credit card transactions are handled in a variety of ways - e.g. Authorize and Capture, Partial Capture, Sale Mode, Transaction Reversal, Partial Reversal etc. Flexibility in transaction handling helps the Merchant to be selective while accepting orders and consequently manage transaction risk in a better way.

Easy Integration

Whatever Payment Gateway system you choose, it needs to be integrated with your web-site. A difficult and time-consuming integration process could be a drag on your resources and future maintenance headache. Prefer an easy and fast process that should not demand periodic upgradation/maintenance.


There are many on-line payment options available today. Some of these are:

  • International Credit Cards from VISA, Master Card, Amex etc

  • Credit Cards valid in India and Nepal only (thankfully, this hybrid species is getting extinct !)

  • Debit Cards

  • Cash Cards

  • Netbanking (direct payment from your bank account) etc.

Ideally, a payment gateway system should be able to accept as many on-line payment options as possible.

Hidden Costs

I have already discussed this aspect in previous article, here are some examples of hidden costs in payment gateway system. Many of these may not find a mention in website of the payment gateway service provider. However, its very important that you take into account these factors while calculating selling price of your product/service:

  • Chargeback fees

  • Reversal fees

  • Termination fees

  • Hidden setup charges

  • Non-Sufficient Funds fees

  • Annual fees

  • Statement Fees

  • Customer Support fees

  • Withdrawal Charges

  • Time to Withdrawal

    • Find out how soon you can get access to your money. Some Payment Gateways may proclaim a no-reserve policy, but take a month to remit you your funds. That means your funds remain blocked for a period of one month with the provider. While most Payment Gateways may maintain reserves for risk mitigation, it is essential to estimate within how much time you will have access to your funds

Technical Support

Quality technical support is important as most Merchants may not possess in-house technical expertise or skill necessary to troubleshoot as sophisticated a system as payment gateway or answer technical queries from customers. Check the level of support service, get feedback from existing customers.

Happy and Safe Surfing

Dr. Amit K Chatterjee

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Source: FAIDA - Newsletter on Business Opportunties from India and Abroad Vol: 5, Issue 2 ; April 21' 2004

Author : Dr. Amit K. Chatterjee
(Amit worked in blue-chip Indian and MNCs for 15 years in various capacities like Research and Information Analysis, Market Development, MIS, R&D Information Systems etc. before starting his e-commerce venture in 1997. The views expressed in this columns are of his own. He may be reached at )

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