Payment Gateway Integration Cost Explained: What Businesses Need to Know

World economies are adopting fast payment systems, as the global economy is inclining towards cashless transactions. 

A global payment preferences survey by DataPortal revealed that the countries like South Korea, Sweden, Russia, UK, France, China, Spain, Japan, US, India prefer cashless transactions via fast payment systems, with South Korea having 77% optimism, and whereas India having 52% as preferred choice. 

In the Asia Pacific region, the magnitude of cashless transactions is expected to reach 1818 bn USD by 2030, from around 500 bn USD in 2020. This astonishing optimism for fast payment systems and ever expanding digitalisation reflects the stability of payment gateways. The existing infrastructure supports a variety of channels for instant settlement of cash.  

With this, businesses aiming to expand their footprint, cannot miss out on integrating the digital footprint of fast payment systems. The commanding position payment gateways hold must be understood, and identify its place as a faster way to growth.

So, for businesses wanting to understand the budgeting of the payment gateways integration cost becomes vital. 

In this blog, we will take on board the various components of these costs and highlight key factors that influence the cost of payment gateways integration for businesses of all sizes. Let us begin.

Components of Payment Gateway Integration Costs

Accepting payments online is a must for businesses today, but the convenience of payment gateways comes with associated costs. These costs can significantly impact a business’s profitability and overall financial health. Let’s break down the key expenses involved in the process.

1. Initial Cost

• Setup Fees: Your account set-up fees are the initial charges that are imposed to you by payment gateway providers as part of initiating and configuring the gateway. This may include the cost of setting up the gateway service such as any necessary hardware or software. This fee varies depending on the provider and how complex it is to integrate their systems. It’s important that you consider this when choosing a payment gateway service. This may range from US $25 to US $250. 

• Transaction Fees: Transaction fees are levied for every transaction handled through a payment gateway. These normally consist of a fixed fee per transaction along with a percentage of each transaction’s value itself. Especially for high-volume businesses, these have an impact on your total processing costs. This may range from 1.5% to 3.5% per transaction (in India).

2. Ongoing Costs

• Monthly/Annual Fees : Some payment gateways impose monthly or annual recurring charges to cover account maintenance and access to their services. These fees usually represent ongoing support, updates, and other administrative expenses. For payment gateway services, these costs should be considered by enterprises during budgeting processes. This may range from US $ 10 to US $70. 
• Development and Integration Costs: These costs relate to the costs incurred in the implementation of the payment gateway to a business or its existing e-business environment. This can include the cost of employing developers to work on the integration or the cost of acquiring integration tools, and may differ depending on the level of integration needed and the needs of the business. This ranges between US $100 to US $1000. 
• Additional Costs: Other charges may involve enabling other features such as subscription, multiple currency, enhanced reporting tools, additional user accounts or any premium support services. Businesses should then look at the provider’s price list to determine if there are any extra costs that might apply. Usually ranges between 1% to 2% extra.

3. Compliance and Security Costs

• Compliance: Compliance costs include expenses incurred to meet the industry standards and the regulatory requirements like the Payment Card Industry Data Security Standard (PCI-DSS). It may also cost additional expenses to ensure that your payment gateway integration follows these standards and to cover security measures and audits.
• Fraud Prevention: Some payment gateway services include fraud prevention tools, chargebacks and services. Most payment gateways come with inbuilt fraud detection and prevention solutions that provide protection against fraud but at a cost that depends on the level of protection offered. This can help in the long run to save the business’s resources since the risk of fraud-related losses would have been minimized. This is definitely worth the investment.
• Currency Conversion Fees: If your business involves customers from other countries, then you will have to pay for the conversion of currency. These fees are used to convert the foreign currency transactions to that of the business’s local currency. This service is usually done by payment gateway providers and they usually charge some percentage of the transaction amount for this service.

Payment Gateway Cost Optimisation: A Case Study

3 Key Factors Affecting Payment Gateway Costs

1. Business Size and Transaction Volume

The cost of the payment gateway also varies according to the size of the business and the volume of transactions it does. Some of the larger businesses that process more transactions get to negotiate for lower transaction costs due to the number of transactions they bring. 

However, small businesses or start-ups may be charged with higher fees due to the fact that they transact fewer volumes than the large business. Some of the payment gateways offer price packaging systems; this means that as the number of transactions increases the price per transaction reduces. 

For example, a business that does an annual turnover of $1,000,000 in business may be levied 2.5 % per transaction while one processing $10 million may be charged only 1.5% due to the fact that the amount of purchase that qualifies for this offer attracts a higher discount.

2. Type of Payment Gateway

There are different types of payment gateways, each affecting costs differently:

• Third-Party Payment Gateway: These are hosted solutions in which the payment gateway provider manages the payment process on their own servers. They are often easier to integrate but can have higher transaction costs and less flexibility. Some of the examples of such processors include PayPal and Stripe. These gateways usually work by taking per transaction fees and/or monthly fees. For instance, PayPal charges about 2. 9% + $0. 30 per transaction fees which can be quite expensive if many transactions are made.
• Direct Payment Gateway: Direct payment gateways are those which are embedded into the business’s website and the customer enters their payment details on the site directly, this cost for payment gateway integration into the website impacts further costing. It is convenient for the user and is often more economical for businesses where the frequency of transactions is high. But they are usually more complicated in terms of configuration and implementation. For instance, a direct payment gateway, such as Authorize.Net may have lower per transaction costs than the other methods but may require more expensive setup and integration.

3. Geographic and Market Considerations

The cost of the payment gateway integration also depends on geographical location and market factors. These charges can be further differentiated by locality and competition within the area. 

For example, payment gateways in the countries with stricter regulatory and security standards are likely to incur higher compliance expenses, which will be recovered from the businesses. 

Also, the payment gateways may offer different fees depending on the currency to be processed. A gateway that is operating in the U. S. might have a different fee structure from that operating in Europe or Asia. 

For instance, handling payment in different currencies may attract other charges such as currency exchange rate charges which may be between 1% and 3% of the cost of the transaction.

Why Choose ScaleupAlly For Custom Payment Gateway Integration?

At ScaleupAlly, we offer you the most convenient and the most suitable payment gateway integration services for your business regardless of the scale and the level of advancement of your business enterprise.

All of our services are provided by a team of tech professionals, guaranteeing that your transition would be as premium as possible with no technical issues to worry about! Our support team is always on standby to help you get the best out of your payment gateway.

With a proven track record of delivering custom payment gateway solutions, we’ve helped countless businesses boost sales, better customer satisfaction, and future-proof their operations. 

Innovation is at the heart of our company and therefore, we always ensure that we are on the lookout for the latest payment technology, to keep you stay ahead of the curve. Call ScaleupAlly now and schedule your free consultation meeting and we will help you decide on the best payment solution for your business.

Closing Note

The traction payment gateways are gaining for businesses that are expanding and scaling, it is mostly because of the ease of doing business the interface offers. It provides end to end transaction faculty. The secure connection between the source and terminal point gives it the backbone. 

As once quoted by Doug Ludlow, Co-Founder and CEO of MainStreet, “We’re watching financial power shift from enormous, global institutions to individuals.” This aptly summarizes the importance of payment gateways to be integrated by businesses for their strategic models in today’s time.