Choosing payment gateway for EU and global transactions

We all have certainly heard that payment gateway should be reliable and stable, while meeting requirements of merchants. Additionally, there are set of accepted criteria for selecting and technology for connecting a payment gateway. But do you know exactly what a payment gateway is?

Today it’s easy to get confused because there are many participants, intermediary organizations, and financial institutions involved in payment processing. Structures in high-risk are particularly complex because they need to be adaptive to the changing environment, comply with regulatory requirements, and provide quality service to their merchants.

In today's article, we will precisely define what a payment gateway is, its distinguishing features, and how to choose one. Monoup has prepared an entire guide, so let's move on.

What is payment gateway?

A payment gateway is used by merchants to obtain payment data from customers and use it to accept online payments. The complex includes order page, which is typically found in any online store; it is the "front-end" of the payment solutions, and technical part, such as API, which is considered the "back-end."

Payment gateway acts as a bridge between payer, business, and banking network, and it actually makes payment processing possible. Gateway performs technical work of "launching" payment page, processing data, connecting with all participants in the process (including issuing bank and acquirer), informing all participants about the outcome of transaction — success or decline. And also, at the same time gateway displays all this on the website in a way that everyone can understand. Payment gateway is a technology with a quality interface that directly processes your payments. This is what distinguishes it from payment system, payment aggregator, electronic money institution, and other financial institutions. Each of these can be a payment gateway, but not always is one.

Types of payment gateways

There are several types of payment gateways that business can choose for different purposes and depending on its type of activity. The typology is quite our own, and important to note, that essence of entire process remains unchanged in each case.

So according to Monoup typology you can use:

• Own gateways: These gateways belong to the business itself, which has full control over how customers see and use the website, and independently operates payment flows. To implement this idea, financial license, PCI DSS certification, and suitable software would be required. Essentially, you need to create another company in addition to the main business, which may be expensive and time-consuming. But for large products, this can be a good option. An example of such a structure we can say Alibaba Group in China, which successfully created its own payment solution, Alipay, and not only processes own payments but also offers wallet to third-party businesses.
• Third-party gateways: This type of payment gateway is the most common for European and global payment providers. These gateways are usually international payment gateways to which customers are redirected. They offer a high level of security and reliability, although business will have fewer opportunities for localization and customization and will have to adhere to some rules established by the PSP. At the same time, the so-called third party is fully responsible for the high level of payment approval ratio, quality of payment methods, and their 24/7 operation.
• Direct bank integration: This option allows business to directly connect to the bank systems. Most often, such processing is available to local small businesses that accept payments only within their country. Or to well-established products of an international format that can ensure security and a clear flow of traffic. For high-risk businesses, such an option is practically always unavailable.

Technical differences between all three options are quite small, but there can be significant variations in the cost of payment gateway, depending on its type, as well as in the capabilities. Gateways of so-called third parties are most popular in iGaming, which we commonly call payment systems. These companies process 90% of all traffic in high-risk and are providers of payment acceptance services.

Using such companies is more advantageous for most businesses, as it allows them to focus on their own product and not develop additional payment structures if it is not of interest. Not every business can afford to create a separate company that will process payments, as this is a complex process requiring direct expertise. Also, not all types of activities have access to direct cooperation with banks, as the latter strongly limit their client base.

Therefore, mutually beneficial cooperation with a payment gateway developed by a stable payment system is often the best option.

Payment solutions in the EU

Payments in the EU began to develop relatively long ago, and European Union is already considered a mature market. European population prefers to use online services of European payment providers and is not ready to test international options, giving preference to the traditional approach. At the same time, some of them are capable of making cross-border payments and are well-known, such as Visa and Mastercard payment cards. Others are focused on local offerings, such as Sofort in Germany, MBWAY and Multibanco in Portugal.

Europe has long been the center of fintech and number one target market for many businesses, so payment options can suit any taste. At the same time, many of them are outdated, such as Giropay, which is being phased out in favor of the new payment solution WERO. Open banking has created a real boom in fintech and is growing very actively in the EU and Eurozone. Many payment solutions for iGaming are now being built on this technology, offering players automatic and fast payment. Thanks to experience, availability of payment gateways in Europe is much higher than in many developing countries, and therefore, building a business here is easier. However, on the other hand, strict regulations and norms complicate business in the region, and therefore, businesses need to find a balance.

How to choose right payment gateway

There is a lot of contradictive information online about how to choose payment systems, as this topic constantly raises questions among entrepreneurs. Choosing the right gateway for accepting payments in the EU means verifying whether it meets the right combination of price, convenience, and coverage for your iGaming product. Monoup's expertise suggests focusing on several key parameters:

• Speed and reliability of payment processing: Processing time is the period required for transaction to be approved or declined, including time needed for its complete execution and debiting of funds. For online gambling, instant payments with quick crediting of funds, as well as protection of clients' personal data, are of first importance.
• Coverage of methods: Merchants prefer a payment system that can process payments in several countries or regions, which is undoubtedly an important factor. This allows you to cover a range of needs with a single integration. At the same time, don’t be too focused on this, as specialized providers sometimes offer much better service than aggregators. Primarily, the quality of meeting the need is considered, not the savings of labor resources.
• User experience: Online transactions can be just as easily canceled as they are completed, with 60% of payments being declined if customers cannot find a preferred payment method or encounter difficulties during payment. Considering this, another important point emerges — UI/UX of payment pages. Simple payment pages with several options will be significant point for the majority of payers.

Of course, in practice we understand that each business case can be very different. Thus, we may add some more individual factors when choosing payment gateway for your business. We always recommend to step forward from your own needs and requirements so then you find the most suitable PSP.

We at Monoup help our clients to find the right payment gateway that will fulfill all needs and even more. If you wish to receive an expert help in payment solution choice — reach out via Telegram or email and we will make the ball rolling! We can assist you within the EU and beyond in almost every reachable market. Monoup also open legal entities and supports them at every stage of operation. Reach our for more and read Mono Talks for further advice.