Advancements in e-businesses have changed the way money is transferred. At a basic level, online money transfer serves as an electronic alternative to traditional paper methods (checks and money order). But it should also be secure, cost-effective and user-friendly. A ‘Payment Gateway’ is an e-commerce application service provider that authorizes credit card payments for e-businesses, online retailers and bricks & clicks models.
Advancement in Payment Gateways through Gartner Hype Cycle
Technology in Payment gateway has come a long way from being only a money transfer portal to a customized payment platform.
Payment Gateway application started as a solution to facilitate online payments for e-commerce industry. As a simple substitute for physical point of sale Paypal, CCBill and WorldPay were the innovators to enjoy first mover advantage. Paypal is still the largest payment gateway provider.
Many niche players followed Paypal to have a local gateway with the same technology. These included Flattr, FastSpring, Amazon payments etc. But these lacked innovation to improve customer experience and security issues.
Slope of Enlightenment
Many businesses are not satisfied with obsolete technology, Braintree and Stripe have taken strides to improve the present technology. Braintree initiated credit card data portability standard in 2010 and provides businesses with the ability to accept payments online or within their mobile application. Stripe with user-friendly API, security and customer service has changed the course of technology. Stripe’s software kits support Apple Pay integration in iOS apps, Bitcons and Alipay.
Market Share of Payment Gateways
Paypal is still the most favored payment gateway, but customer preference is gradually shifting towards Stripe. Currently, PayPal suffers from scale, age, and bureaucracy, whereas Stripe with improved technology is hustling for market share. They’re working hard to differentiate with great customer service.
This is a two part series about payment gateways. The next part will focus more on Stripe payment gateway and its advantages.