Updated: Aug 10, 2019
If you are a small business owner then the chances are you need a modern, hosted payment gateway provider such as Paypal, Stripe or Braintree to take your online payments.
What is a modern, hosted payment provider?
Traditionally sellers needed to set up a special merchant bank account and this would take money from the buyer’s credit card. This is the classic method of credit card payment and examples of providers include Authorize.net and Worldpay.
These days, providers such as Paypal, Stripe and Braintree use their own merchant account and will directly take money from the buyer’s account and post it into your account. They check for funds and either authorize or decline the transaction in seconds. These are the modern payment gateways and the main drawback over classic gateways is that they usually take a higher transaction fee.
There are two ways for your payment gateway to interface with your customer and process their transaction:
An integrated payment gateway are embedded in your site using an API, and the customer remains on your site for the entire transaction. This gives for a smoother, more professional looking sale’s experience. However, as you are now handling customer credit card data, you must now be PCI compliant. As a small business this may be more trouble than it is worth.
A hosted payment gateway takes the customer out of your site and handles all the credit card data themselves. If you take customer details at point of sale then you should not collect their credit card information for your new customer database at this point. Your payment gateway provider will handle all of that. Whilst the processing is done out of your site, you can still create an easy buying experience.
So that’s why as a small business owner, you probably want to go for a modern, hosted payment provider.
Paypal vs Braintree vs Stripe?
Here is an infographic comparing Paypal, Braintree, Square and Stripe.