Businesses that operate online are dependent on the services of payment gateways to securely process credit/debit card and other payments digitally. They are vital to ensuring that customers can pay and instantly receive authorization for their transactions so their order can be fulfilled immediately. However, this makes payment gateways an area of weakness for sales. If anything goes wrong with the payment gateway, customers are totally unable to pay, which could cause frustration and lose you valuable sales during an outage. Setting up a backup or multiple payment gateways is a solution that avoids any downtime or failed transactions.
How Do Payment Gateways Work?
A payment gateway is a go-between for a business and a bank or other financial institution that authorizes cashless payments. In the case of an eCommerce business or other company that receives digital payments, the customer paying for a product or service is taken to a secure payment screen that connects them to the payment gateway, where they can enter their credit card information or digital wallet login.
Payment gateways support multiple card types and payment methods, saving the merchant the trouble of manually enabling a variety of payment types. The payment gateway connects to the bank or other payment processor and receives authorization, then confirms to the merchant that the transaction was processed successfully.
Why Use Multiple Payment Gateways?
Configuring your website to use multiple payment gateways may take extra work, but it can pay off when one stops accepting transactions for any reason. Without a payment gateway, it’s impossible to make sales, even if the rest of your site is fully functional. Outages can last from minutes to days depending on the situation.
Payment failures can happen for a variety of reasons, some due to the customer’s payment method not being accepted, others due to issues with the site, but outages or disconnections from the payment gateway can’t be resolved by the customer or merchant, putting a halt to all transactions. Power or internet disruptions, server load issues, or technical glitches could cause some or all merchants that use a payment gateway to experience a payment ‘blackout’.
The simplest way to solve this problem using multiple gateways is to implement your preferred gateway as the default and a second gateway as a backup. Set up both ahead of time, and when there is downtime with the main one, update your payment system to make the second one the default, and all transactions will be able to continue through the second gateway until you find that your usual gateway is usable again.
Using Smart Gateway Routing
Another approach is a smart gateway setup that chooses the right gateway each time a customer tries to pay. An intelligent approach is valuable not only when dealing with blackouts, but because different gateways may be better for different customers.
- Transactions in different currencies may be processed faster and at a more affordable rate with a different payment gateway.
- Different ones can accept other payment methods, so multiple payment gateways will prevent customers from being unable to pay with their preferred method.
- If one gateway charges a lower rate based on the value of the transaction, routing higher-value purchases to them while sending lower-value items to another will save you money.
- A merchant that submits a high volume of transactions at once may overload the payment gateway, causing disruptions, but multiple gateways can reduce the load.
Selecting based on the transaction type, currency and issuing bank can automatically sort customers into the right payment gateway for them.
Dealing with Payment Failures
When payment failures do occur, they lead to customer frustration and abandoned transactions. Failed payment recovery is the process of recovering this lost revenue. Offering the ability to retry should be the first step to payment recovery. Let users retry immediately, then ask them to retry after a few minutes if this fails. If customers are still unable to pay, you can suggest they try an alternate payment method in case the problem is on their side.
If this fails, emailing or contacting the customer to tell them to try again when the problem is resolved can be the next step. Payment failure is a cause of cart abandonment, which is frequently resolved through emails. Baymard Institute found an average cart abandonment rate of 69.57%, and reasons given by surveyed consumers included 13% who reported site issues and crashes, and 6% who cited a lack of payment options. FreshRelevance reported use of cart abandonment emails led to $10.25 in sales uplift, leading to recovered sales.
For subscription models, payment failures can be set to retry at a certain interval, and contact the customer about updating/verifying their payment information. This process is less time-sensitive than eCommerce transactions, however, when initial signups to subscriptions have payment failures, you won’t have a contact method for them. Include a contact email on the payment screen so they can reach out to you about technical issues. Otherwise, this is a good reason to have multiple payment gateways.
The best approach is to make it clear what problem is causing payment failures, whether it’s your platform, the payment gateway, or the customer’s payment method. This can inform customers whether they should retry with the same method or find another solution.
Challenges of Multiple Gateways
Supporting multiple gateways can have higher costs, more administrative setup, and less access to high-volume pricing if your revenues are divided between them. According to Ralph Dangelmaier of BlueSnap, the average business can have five gateway processors and four acquiring banks. Often businesses add gateways to support a certain payment method or currency, but this leads to more accounts and payment data to track. It’s best to avoid having more than you need and to replace any that aren’t vital to your business with more comprehensive options that cover more payment methods.
A backup payment gateway or multiple gateways for different payment situations ensures that you’ll be able to serve your customers and avoid lost revenue even when your partners fail. You should always be responsible for your own site’s downtime, and preparing for the possibility of delays and rejections in the payment process is an even greater step toward staying open for business even in circumstances beyond your control.