What Businesses Fail to Do When Selecting a Payment Gateway

That’s right, the payment gateway is almost always an afterthought to the primary systems that a business is using or considering using, whether it be a point-of-sale (POS) system, e-commerce shopping cart or other applications.

Often, business owners or managers spend all their time researching their primary solution and virtually no time understanding the features of the payment gateway side. Most of this can be attributed to just an overall general lack of knowledge about payment gateways, and to the confusing landscape of payments. It’s not the business’ fault. After all, you have a business to run, and don’t have the time or desire to become a payments expert.

Unfortunately, this often leaves you without the proper solutions you need to protect and grow your business while accepting payments.


To get the best solution, you should be spending just as much time evaluating the features of the payment gateway as you do a POS system or shopping cart applications. With the advancement of technology, more and more modern shopping cart and POS solutions are either building a payment gateway directly into the software solution they are selling or are developing a partnership with one or more payment gateway providers to integrate within a specific POS and shopping cart solution. That is fine, but often there is virtually no transparency surrounding those partnerships and how the integrations work. Without transparency, it’s extremely difficult to fully understand the fees, charges, and gateway features. Additionally, integrated payment gateway solutions are often sold on the concept of simplicity and the majority of the time simplicity always equals higher cost.

Related Article: Taking Payments Online with a Gateway.

To really understand your costs and options, you should be looking at and comparing the features and pricing of many gateway providers. Some of the things that you should consider when evaluating and selecting a payment gateway are below, in no particular order.


Make sure that the gateway is compatible with the POS or shopping cart applications that you’re evaluating or currently using. Most reputable gateway providers have websites that will provide you with compatibility documents and technical specifications.

Terms and Conditions

Always read the terms and conditions of the payment gateway provider. The payment gateway terms and conditions are equally as important as the agreement you have with your processing company. Look at the agreement for items such early termination fees, monthly or annual processing volume requirements, per transaction fees, monthly fees, minimum fees, tokenization fees, fraud software fees, QuickBooks integration fees, and all other fees that are discussed in the agreement.

Related Article: Integrating Credit Cards with QuickBooks.

The terms and conditions of the payment gateway provider should allow you to sell your specific type of goods and/or services through the gateway platform. Just because the payment processor allows certain types of payment transactions does not necessarily mean that the payment gateway will allow those same transactions. This is typically not an issue, but nonetheless it should be asked of any gateway provider. You don’t need any surprises in a new gateway partnership.

Fees and Charges

Since merchant services pricing comes in literally thousands of different combinations, it’s no surprise that gateway pricing is no different or less complicated to understand.

The best way to understand payment gateway pricing is to look at the “total cost” of all of the gateway services that you will be using. The majority of the total cost typically consists of a monthly service fee along with a flat per transaction fee that could range from $0-$25 per month and $0.01-$0.30 per transaction. The lower the better.

Sometimes credit card processors, POS systems, or shopping cart providers often claim to not charge for the cost of a payment gateway if you use its products. As we know, nothing is free, and there is always a cost for the payment gateway that is wrapped into the total cost of other products/services that are sold to you.

International Transactions

If you do business outside of the United States, it is always best to ask the gateway provider if they are capable of processing international payments. Not all payment gateways are the same when it comes to international payments.

If a payment gateway does not allow international processing and it is required for your business, then you should either shop for a payment gateway that will allow for international processing or add a second gateway specifically for international transactions.

However, note that shopping around for a gateway that will allow for both domestic and international transactions on one gateway account will almost always be less expensive than having two gateway providers and two accounts.

The payment gateway agreement should clearly spell out any additional fees that are assessed on international transactions.  Don’t assume that international gateway transaction fees will be the same as domestic gateway transaction fees.

Reporting and Analytics

A payment gateway should offer a back-end website or back-office application that is user friendly for you to access reports, settings, and possibly some analytics. Most modern payment gateways provide at a minimum basic reporting. However, if you’re talking with a gateway provider that does not provide basic reporting this should be a red flag for further investigation. There are also separate companies that can integrate with your processing account or payment systems to provide detailed reporting, but you can expect to pay higher monthly fees for such services.

Multiple Options with One Account

In some cases, you may need multiple merchant ID numbers (MIDs) or multiple payment processors. In those situations, you’ll want to pay careful attention to the options with the gateway providers you’re considering.

Merchant Identification Numbers (MIDs)

If you need multiple MIDs, you should try to avoid using a gateway provider that will require you to set-up multiple gateway accounts.

Some gateway providers charge extra fees for adding more MIDs to an existing account and some don’t. It is always advisable to look for a provider that does not charge extra fees for adding multiple MIDs to the same gateway account.  Multiple gateway accounts tend to be more cumbersome to manage, so it may be beneficial to find a gateway that will allow you to use multiple MIDs on one account.

Multiple Payment Processors

If you need to use more than one payment processor, you’ll need to determine if the payment gateway can support connecting to multiple payment processors using one gateway account. This is important for businesses that might direct certain types of transactions, such as high-risk transactions or international transactions, to a specific processor.

Developer Tools

A solid payment gateway provider will offer developer tools and Application Program Interface (API) access. If you have an in-house IT/development team, you can even have them take a look at the available developer tools when you’re evaluating gateways.

A gateway provider should not be charging any extra fees for access to developer tools and APIs.

Recurring and Subscription Payments

Almost all payment gateways can handle some type of recurring billing or subscription payments. If the gateway does not offer a recurring payments feature, you may want to research other gateway providers. You could also choose an add-on service to handle recurring billing, but you’ll pay much more than if you use a provider with integrated subscription billing.

Of course, just because a gateway might offer a recurring payments feature does not mean all platforms are created equally. Some have use- friendly interfaces to schedule recurring payments and some have interfaces that are so old and difficult to use they belong in a museum. Additionally, some gateways support automatic card updating, a helpful feature to reduce declined transactions due to expired cards.

Related Article: What You Need to Know About Recurring Billing


Most payment gateways integrate with third-party accounting platforms such as QuickBooks. If you plan to integrate your accounting system, you should verify that that the accounting system you use integrates with the gateway.

A majority of gateway providers offer different levels of integration or are only compatible with certain versions of software. Just because a gateway might integrate with your accounting application doesn’t mean that it is compatible with all versions of that application. Be sure to ask about your specific software and the gateway integrations for it.

Some of the providers do not charge for the integrations and others charge extra fees. Again, be sure you completely understand all costs before signing up for any payment gateway.


Since EMV chip cards are more secure and commonplace today for in-person transactions, it has resulted in more fraudulent transactions going online. With the present state of security breaches and rampant online fraud, a payment gateway should offer fraud detection tools as standard features or at the very least, as add-on options. Some gateways charge extra for these tools. It is highly recommended that you (and your staff) understand and use the fraud tools that a gateway provider offers. This is one place not to skimp on extra costs associated with using fraud tools, but it’s still worthwhile to compare the fees of one gateway provider to another to determine if any extra fees for the fraud tools are reasonable.

At a minimum, you’ll want to select a gateway provider that offers secure tokenization of transactions at no additional cost. The majority of time a gateway provider will not charge for tokenization services, but it is not uncommon for a sales agent to try to build in profit by charging for tokenization. Security is more important than ever today and a sales agent should not be using security as a profit center, especially since several reputable gateway providers include tokenization at no extra charge.

Related Article: Address Verification Anti-Fraud Tool.

PCI Compliance

For small businesses without IT staff or little working knowledge of PCI compliance, you should determine if the payment gateway is either hosted or integrated. The majority of the time, small businesses will want a hosted gateway platform where the gateway provider shoulders most of the PCI compliance burden. An integrated option requires that you do more development work to integrate the payment gateway as well as shoulder the majority of the PCI compliance requirements.


Ideally, the payment gateway should automatically batch/settle each day and allow you to adjust times and settings for batches/settlements. It is almost never a good idea to use a gateway that does not allow for automatic batch/settlement at a specified time of day.

Most payment gateways will automatically batch/settle transactions, but you can never be too cautious. Batching/settling correctly is important because if transactions are not settled within specific timeframes, they will automatically be “downgraded” to higher processing rates with the processor or the credit card brands. These types of downgrades can add up fast, and it can be avoided easily with proper procedures.

Related Article: Save Money by Avoiding Credit Card Processing Downgrades.

The above items are just some of the most important that you should consider when evaluating a payment gateway provider. As you can see, selecting a payment gateway is just about as complicated as selecting a payment processor, but little, if any time, is spent by businesses researching payment gateway options. Remember that selecting a payment gateway is just as important as selecting their payment processor.  It should not be an afterthought.

CardFellow has made the gateway researching process easy with a comprehensive payment gateway directory that provides details of features and costs for many popular gateways. Whether you’re new to credit card processing or just in the market for a new solution to save money, be sure to start there.

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