The world is, indeed, going digital. E-commerce is now the king, and any enterprise, big or small, cannot escape this change. More and more consumers prefer to hit the buttons of their computers and smartphones to buy stuff instead of visiting the physical store. B2B and B2C deals are increasingly being carried out online, with the buyer paying the seller digitally. Globally ecommerce retail sales in 2019 was around $3.46trillion compared to $2.93 trillion in 2018, yearly growth rate of 17.9%. However, Singapore’s ecommerce market totalled $4.11 billion in 2019 with year-on-year growth rate of 35%.
You would notice that any transaction taking place over the internet has an essential part of the online transfer of money. Online payment requires a secure gateway to complete the sales cycle. If there are glitches in the payment gateway, it will impact not only your business but also the conversion rate. Customers’ eCommerce experience largely depends on the smooth payment transaction.
Understanding Payment Gateways
We know that payment gateways are nothing but an infrastructure that facilitates online payments. A business can accept money through this system and manage funds in what is called as ‘Merchant Accounts.’ Merchant accounts, or only the accounts assigned to companies, can either be dedicated or aggregated. Dedicated accounts are customers centric and for single user only. The merchants deals with the banks directly and money is received in merchants account. This facilitates the merchants to have greater control over the funds and payment gateway system. However, dedicated account is time-consuming as it involves more paperwork and checks by the bank on the credit history of the merchant.
On the other hand aggregarted account is fairly simple in terms of setup and to operate. Payments processed by the gateway are received on behalf of various merchants in a single aggregated account, managed by the aggregator. Indeed the merchant will have a lesser control over the account as the aggregator functions as the middleman.
Factors considered while selecting a Payment Gateway
The needs of every SME are unique. The budget allocated towards the setting up of the payment gateways will depend on the frequency of transactions handled by the gateway in a month, locations of the target customers, future business scalability are some of the factors that can influence the decision. Here, lets look at some of the key factors.
- Setup cost – This is an initial one-time expenditure. Integrating the payment gateway with the business and getting requisite approvals for the merchant account are the key elements here.
- Recurring outlays – SMEs must consider how much money will have to be expended monthly to keep the gateway services up and to run. For example, every transaction that is facilitated by the gateway doesn’t give the entire money to the merchant; a small part is taken away in the form of gateway services fee. This can be anything from 2 to 5 percent. The gateway can also charge a flat fee for every transaction. The support and service provided by the gateway also come at a cost.
- Others – From refund claims to chargebacks (a scenario where the sender initiates a dispute, and the transaction needs to be reversed).
Indeed, this is of paramount importance, more critical than even the costs involved. Customers must feel secure when using the gateway provided to send money. From data encryption to CVV verification to 3D security and storage and management of data, there are many things to consider. Another concept here is that of token technology, where any sensitive data is replaced by a custom token that is non-descriptive. SMEs must know that their brand value can be impacted in an event where security infrastructure is weak.
While most e-commerce payment transactions are done using credit and debit cards, emerging tech is changing the landscape and making it more seamless. For example, services like PayPal and AliPay come with features like an easy on-page checkout process, where the sender of money is only required to enter a password without having to provide all card details, billing information, and other details. SMEs must ensure that the payment options given by the gateway are extensive. However, many Singaporeans do depend on local payment gateways like eNETS and SmoovPay. In the case of eNETS, setting up merchants’ accounts takes anywhere between 2-6 weeks for complete integration and relatively cheaper than other third-party payment gateways, the required lead-time is relatively high. On the other hand, SmoovPay is much easier to integrate and provides very competitive rates. Hence, SMEs must way the options thoroughly and opt that is most suitable for their business.
Not every business will have customers in one region alone. Cross-border payments are gaining traction, and the gateway must support transfer in multiple currencies. The gateway must also be able to connect with merchant banks located in the regions where the business may want to set up a shop. Most gateways now also give the option of dynamic currency conversion, dubbed as DCC, using which the payer can select currency of choice when making a payment.
An E-commerce website can have either hosted or non-hosted gateway. On the hosted gateway, once the customers click on proceed to payment, it redirects to 3rd party payment gateway, which sometimes disrupts the customer’s shopping experience. In the case of the non-hosted portal, it directs the customers on your website to pay directly.
I have heard of websites crashing when the traffic is unusually high? The same can happen with payments in the event of any sudden rush of payers. Moreover, SMEs must aspire for scaling up their offerings, and in this light, the payment gateway integrated with the business must have the provision of high-volume traffic.
Payment gateways facilitate the transfer of received money to a merchant account, and this transfer depends on the payout frequency. Depending on the kind of transactions in the business, the best payout option shall be opted, which can be daily, weekly, or monthly. In a case where refunds and order cancellations are a regular part of the business, payout frequency must be such that refund to the payer can be issued in-app before the money is transferred to the merchant account.
Any service needs reliable support from the service provider. Merchants must go for payment gateways that handle queries and requests in an unfailing and timely manner. Email, instant messaging, and 24*7 call support are desirable.
The top Payment Gateway Service providers in Singapore
PayPal is the most preferred payment gateway globally, and many merchants swear by its trustworthiness. Here are the key points to be considered.
- Setup Cost – There is no setup or recurring monthly charge.
- Transaction Fee – PayPal charges a fixed 3.9 percent fee on the aggregate sale amount. Plus, S$0.50 is the transaction fee for every transfer.
- Merchants can avail discounted rates in the event where sales exceed $5,000 monthly.
Stripe is another payment gateway in the city-state and a prominent player globally. Here are the key points to be considered.
- Setup Cost – No setup or recurring monthly charge.
- Transaction Fee – Stripe charges a fixed 3.4 percent fee on every credit and debit card transaction, plus $0.50 for every transfer.
- The fee on other transactions, including WeChat and AliPay, is 2.2 percent, plus 0.35 percent for every transfer.
- Merchant can avail discounted rates in the event where sales exceed $40,000 monthly.
- Level 1 PCI (Payment Card Industry) Compliance service provider
WorldPay is an international service provider, and its office in Asia is in Singapore. The payment gateway suits many small and medium businesses. Here are the key points to be considered.
- Setup Cost – No Setup Cost and yearly subscription fee of S$650
- Transaction fee – 3.95% per transaction
- Offers three free currencies with the set-up of new account (SGD, USD & EUR) with every additional currency charges S$138
- Fraud protection services can be availed by all merchants at S$0.16 per transaction
- Minimum remittance amount is S$270
- An internet merchant account is a pre-requisite to apply for a business gateway.
eNETS requires to set up a Merchants account with the bank. It is a tedious process to integrate with your website as it takes anywhere between 2-6weeks for complete integration.
- Setup Cost – One-time Setup fee costs S$250 and the monthly Subscription fee is S$72
- Transaction Fee: Charges 3.5% – 4% per transaction
- Has cashback services
- Accepts all major Credit Cards
Red Dot Payment
Red Dot is headquartered in the city-state and was founded in 2011. Here are the key points to be considered.
- Setup Cost – One time set-up cost and yearly subscription fee applicable.
- Transaction fee – For Credit Card – 3% + S$0.30 and for eNETS – 2.8% +S$0.30 per transaction
- It supports 3D secure payments and provides enhanced levels of security.
- It allows payments via a single platform from multiple methods, including cards and non-cards.
- It supports one-click payments and hence can reduce the time from adding products to cart to making payment.
Asia Pay is one of the most widely used payment gateways in Asia. From Singapore to Thailand and China to the Philippines, merchants in many countries use this service provider. Here are the key points to be considered.
- Merchants can accept payments via cards and other modes, including PayPal, AliPay, and China UnionPay.
- Wide options are available to merchants, including e-vouchers, recurring payments, and batch processing.
- 2 to 3 weeks set up timeframe.
- PCI DSS Level 1 compliant
- Options of multi-currencies, Multi-lingual, multi-cards
Wirecard is a provider in Singapore and Indonesia. Here are the key points to be considered.
- All credit card transactions are supported.
- Payments are acceptable from gateways, including Union Pay.
- It can be the preferred choice for cab payments, bill payments, and remittances.
- It provides 3D encryption and is PCI compliant.
It is necessary to note that the integration of payment gateway in the business is now even more critical to the survival of small and medium enterprises (SMEs). A startup can consider opting for a third party payment gateway due to quicker and seamless integration with the website. If the internet fueled the initial growth of e-commerce, events such as pandemics and circuit breakers would necessitate the shift. The bottom line is that any SME, in whatever sector and industry it operates, stands losing customers in a scenario where online payment service is not seamless and secure.