If you are starting a new eCommerce business and/or you want to sell online, you will need a payment gateway. Choosing the right South African payment gateway for your business can be a difficult choice with all the options available out there. This blog will show you the different aspects of choosing a payment gateway from what to look for, the business choices you have and the merchant options available to you.
Here at The Business Directory, we’ve recently had to make the decision to sign up for a new payment gateway account in order to make payments easier for our members, so we thought we’d share our findings.
Questions to ask when selecting a payment gateway
What currency am I selling in?
Choosing currency when you’re looking to sell online in South Africa is pretty easy, so it’s more a question of which gateways offer the ability to sell in South African Rand. If you’re looking to sell in different currencies, your options become more, but there are a few local payment gateways that do allow selling in other currencies.
Am I limited by technology?
This is an important question to ask. If you’re not sure, ask your developers. Some software systems allow only for specific gateway integration off the shelf. What does that mean? Well, you don’t have to hire software developers to build a custom integration and it’ll be cheaper. Most South African payment gateways allow for custom integration and it has great advantages to bigger businesses, but if you’re starting out, you’re looking to save funds, so have to limit yourself initially. Example: Our own choice was limited because there was only one specific vendor that had an integration with the software that we use.
What features do I need?
Do you need standard e-commerce like transaction capability, or do you need something more elaborate like recurring billing, subscriptions or instalment sales? These requirements will help determine who you choose. This might also help future proof your decision if you only want to add that type of functionality later.
What type of cards do I want to accept?
While most South African payment gateways transact with VISA & Mastercard, you might have some additional requirements, so do your homework. These aforementioned options cover probably 95% of the market, but sometimes vendors have unique requirements.
What payout terms do I require?
How often do you require your payment gateway to pay out to you? Do you need it to be automated? Does it cost anything to make payouts? In a small business, these questions are important to answer.
Does my payment gateway require me to have a merchant account?
Some gateways require businesses to get a merchant account from their bank. There are some advantages as you can sometimes get better transaction rates, but this would most definitely affect time to market. What you might want to do is sign up with a payment gateway where you don’t need a merchant account to start trading, and then start the process if when compared it really makes business sense to do so.
Does the payment gateway integrate with my accounting system?
This is a question we get more and more when doing payment gateway setups for small businesses and it’s an important one. Selecting a payment gateway that has an integration with your accounting system will make payment reconciliation much easier. Time is money, so ask your potential gateways this question. The other side of integration with accounting systems is that you can actually use your payment gateway to take payments on conventional invoices that you send out. That will also save you a lot of time, but do note those transaction costs and weigh it up against the manual efforts.
Does the payment gateway take on or off-site payments?
On-site payments (meaning the customer doesn’t have to leave your website when making a payment) is perceived to be a more seamless user experience. That’s important when selling online. If you have a few percentage points more people check out because of that, you’re winning. Research is inconclusive really whether it’s that much of an advantage, if at all, but we’re all for less friction… This topic is also referred to as hosted (off-site) vs non-hosted payments. One note – if your only goal is to send payment links, then it’s all usually hosted with the payment gateway.
What about security?
Most popular South African payment gateways have very high levels of security compliance (PCI). If you’re unsure, ask your potentials more about how they secure transactions.
What other added-value options does the payment gateway offer?
Does the payment gateway offer additional options like Instant EFT, or instalment sale brands (like Pay Just Now) built-in? That just makes things much easier for you as an online vendor so should be considered as a decision making factor. Another factor to take into consideration if you have a physical/retail business is whether the gateway has payment devices or POS integration. You have to decide how important these options are to your business.
What does it actually cost per transaction?
Costs all add up (transaction cost, or making a payout if there is a cost). South African payment gateways are always competitive on price. Get ready for ranges of 2.5 – 4% per transaction.
Are there transaction limits?
Some payment gateways limit the amount that you can take in a transaction through their payment gateway. Sometimes they only limit you initially (a great fraud prevention tactic in our opinion), so talk to your gateways about that as it’s sometimes something that new vendors online forget.
Recommended payment gateways in South Africa
We hope this article helped you make your selection and if so, please go ahead and share with your friends & colleagues.