1. Business
  2. eCommerce

How to Choose an eCommerce Payment Gateway

Scroll to top
Read Time: 8 min
This post is part of a series called Fundamentals of eCommerce .
How to Set Up Your First Shopify Store
3 eCommerce Fulfillment Options: Which One is Right for Your Business?

To be in business, you must sell things. To sell things, money must change hands. For money to change hands, you need a way of accepting payments.

That's what a payment gateway is for. A payment gateway allows you to:

  • Take payments quickly and easily.
  • Keep your customer's money and details secure.
  • Gain the trust of your customers, so they're willing to hand over their money.

A payment gateway helps you make money, but yes it does cost money. It's important to choose a professional payment gateway provider for your online business.

In this post, we'll look at a number of popular options and compare their pros and cons. First, let's review the features to look for in a quality payment gateway.

A Payment Gateway is a Digital Armored Truck

When you're in a bricks-and-mortar store and you hand over cash to make a purchase, the cash is immediately locked securely away in the cash register drawer.

Later in the day, it will be counted up in a secure office hidden away at the back of the store. Then it will be picked up by a heavily armored security guard, who will take the money to a heavily armored truck. It will then be transferred to a secure bank vault or cash storage facility.

Digital cash doesn’t travel in armored trucks, but it does travel inside armored code.

This might sound like a huge amount of effort just to take payment for goods. But in the words of the Cabaret musical, "money makes the world go around". Money is powerful stuff, and all this security prevents it from falling into the hands of criminals.

In today's world, a great deal of money is digital. Not only does money make the world go around, but it also travels around the world at lightening speed. Even so, it still needs to travel securely to stop it from getting into the wrong hands. Digital cash doesn't travel in armored trucks, but it does travel inside armored code.

As a small eCommerce business, it's unlikely you have the resources to create your own virtual security squad from scratch. Instead, you'll have to hire in others to run the security side for you. That's what a payment gateway is for.

Payment Gateways Help Sell Products

As a small online business, you must work extra hard to keep up with the big boys of eCommerce, Amazon and eBay, as well as fighting off smaller competitors.

Being a small fish in a big pond makes it harder to get traffic to your store. But more than that, it also makes it harder to win the trust of visitors to your store.

We've all heard the sob stories of people who have been stung by online con artists. When a customer visits your store for the first time, one of the first things that will pass through their mind is "What if this is a con? How do I know this is a trustworthy site?"

This is where your payment gateway steps in to reassure them.

"We accept payments by PayPal", your site says. Most people have heard of PayPal and know that it's a secure and trustworthy way of transferring money. As you're accepting payments by PayPal, they'll assume you're trustworthy.

PayPal is the best known payment gateway. However, this approach to establishing trust works with other gateways too.

How to Choose a Payment Gateway

With a vast array of payment gateways to choose from (Shopify, for example supports over 50 gateways), finding the gateway that's right for your brand can be a time consuming process. To help you get to grips with what's available, here are the factors you should consider when choosing a gateway:

  • Sign up fees: If you're on a budget, or just starting out, then it's worth looking out for a payment gateway with no sign up fee. However, if you expect to sell a large volume of products, or need particular features, then gateways with a sign-up fee can be more effective in the long run.
  • Transaction fees: Transaction fees eat into your profits, so the lower the better. That said, the best known gateways typically have higher transaction fees, so it can be worth paying the extra fees for the sake of establishing trust with your customers.
  • Countries and currencies supported: The internet has created a global marketplace, which can be worth tapping into if you're selling a product with a global demand. Digital products in particular are worth selling internationally as you don't have to worry about shipping costs. On the other hand, if you're only planning to sell in the US, then you'll have more options on choosing your payment gateway.
  • On site or off site?: With on site payment processing, a customer never leaves your site while making the payment. Off site payment gateways take customers away from your website and onto their website. PayPal is an example of an off site payment gateway. For small companies, off site payment processing may not matter, but bigger brands looking to create a consistent online experience may prefer to keep customers on site at all times.
  • When do you need to be paid?: Some payment gateways allow you to set up recurring payments, which can save you a lot of time if you're selling services or products on subscription. Some also allow you to set up payments to be taken in the future.
  • What products can you sell?: If you're selling services or digital products, check the terms and conditions. Some payment gateways only allow you to sell physical goods.
  • Customer support: Check out the levels of customer support provided. Do you prefer to speak to an actual person when things go wrong? If so, make sure they provide telephone support.

Payment Gateways: Pros and Cons

To conclude, let's take a look at a few of the most popular payment gateways.


Launched in the late 1990s, PayPal is one of the longest established and probably the best known service for transferring money online.


  • PayPal is a well-known brand, so it immediately establishes trust with visitors to your website.
  • Most people with an email address already have a PayPal account, so you won't be asking them to go through an extra sign up process.
  • There are no monthly fees.
  • It's quick and easy to set up PayPal payments on your site.
  • It works in most countries around the world.


  • Because it is so big, PayPal is vulnerable to fraud and scams, leaving you vulnerable to chargebacks and bad transactions.
  • If you're selling physical goods, you're bound by PayPal's buyer protection policies.
  • PayPal frequently locks accounts for seemingly trivial reasons. If you receive a sudden influx of extra sales, you could find yourself unable to access the money without jumping through a series of paperwork hoops.

Amazon Payments

Coming to the party relatively late, in 2007, Amazon Payments provides your customers with the same checkout experience they'd get on


  • Like PayPal, Amazon is a well-known and trusted brand.
  • Most people already have an Amazon account, so you won't be asking your customers to go through an extra sign-up process before they can pay.
  • There are no monthly fees.


  • By sending your customers through Amazon's payment system, you're reinforcing the brand of the world's biggest eCommerce provider, potentially at the expense of your own brand.
  • Amazon has high transaction fees, especially on transactions below $10.


Another new kid on the block, Dwolla stands out because of its low transaction fees. Oh, and in case you were wondering, Dwolla is constructed from combining the words: web and dollar.


  • No transactions fees on payments below $10, and a flat transaction fee of $0.25 on payments above $10.
  • With Dwolla, you can process bitcoin payments, which could prove significant depending on how the future of bitcoins plays out.


  • Dwolla is U.S. only.
  • It's relatively unknown and transactions are processed off-site, a combination which could scare away customers.
  • Customer support is email-only.


Established in 1996, and now used by some 350,000 merchants, Authorize.Net is one of the oldest and most popular payment gateways.


  • On-site payment processing keeps customers in your store throughout the payment process.
  • They have low transaction fees starting at $0.10 per transaction.
  • They are one of the few payment gateways to provide live chat support.


  • Authorize.Net is limited to North America and Europe only.
  • They have a $99 set up fee and a monthly fee of $20.
  • You need a merchant account with your bank to receive payments.


Stripe is the payment gateway with a cool swagger. If you want to make things easy for your developers and your customers, this is the gateway to choose.


  • Stripe is on-site payment processing that's designed to be easy to set up and use.
  • They have no monthly fees.
  • Their process is simple and paperwork-free.
  • It is designed for today's internet.


  • It is U.S., Canada and UK only and will be launching in other European countries soon.
  • They have relatively high transaction fees.

If these providers do not fit your needs, or you want to do more exhaustive research, then jump over to Wikipedia for a more extensive list of payment gateways.

The Choice Is Yours

PayPal makes sense if you're bootstrapping and don't know a ton about coding. Stripe's the best choice if you've got a developer on board and want to keep everything looking sexy, or if you're confident at handling WordPress plugins. Dwolla's a good call if you're selling high volume at low cost to the US market.

The Most Important Thing is to Choose

Although there's no way around choosing a payment gateway, if you want to sell online, you have to make a choice. Don't let it be a block to setting up your online business. With the exception of Dwolla, transaction fees are similar across the board.

My advice is to pick a gateway, and roll with it. It's unlikely to be a decision that sinks your business, and once you've got the budget, you can always upgrade in the future.

Did you find this post useful?
Want a weekly email summary?
Subscribe below and we’ll send you a weekly email summary of all new Business tutorials. Never miss out on learning about the next big thing.
One subscription. Unlimited Downloads.
Get unlimited downloads