Is your payment gateway good enough?

By: Shoresh, Kwasi & Justin

If your company or business accepts online or mobile payments from customers, you are probably familiar with Payment Gateways (PG’s) (sometimes referred to as Payment Service Providers outside the US). PG’s play a vital role in payment processing: they can store and protect your customer’s’ payment information, usually work with several (but a limited number of) currencies, submit transaction information to payment processors, and report the status of the transaction, e.g. success or failure, to merchants, to name a few.

Considering the significance of a reliable payment solution and the critical role of PG’s in this process, it is important to do research before choosing your gateway partner. In fact, picking the right payment gateway (or gateways) is a crucial step in building a payment infrastructure that can meet your business needs. Otherwise, and in the absence of modern tools like Spreedly, moving from one to gateway to another is a challenging and time-consuming task.

Merchants seek an optimal combination of performance, efficiency, reliability, and cost. However, too often we see merchants solely focused on credit card processing fees and nothing else. Other areas, like success and decline rates, uptime, and currency support can have just as big an impact on your bottom line. Often only once in production do merchants begin to realize the significance these other factors can have on their business.

The payment business is highly competitive. We at Spreedly want to help unearth value based on data we provide. In the absence of a “Good Housekeeping Seal of Approval” in the marketplace, the next best thing is a data rich set of tools and information available when you’re shopping for a payment gateway.

The Payment Gateway Index, Spreedly’s early attempt to provide insights for merchants when choosing a gateway to meet their needs, launched in late 2013. Despite its discontinuation in May 2015, we still witness a considerable amount of visits per day to the Gateway Index, which emphasizes the market need to for a reliable source that is backed by data for gateway comparison. Moving forward, we are determined to use the power of market insight and data analytics to provide actionable insight and more coherent efforts to address a variety of challenges in the payment industry, including credit card decline rates.

In this post, we provide data for two important factors when it comes to picking the right gateway(s): the most popular gateways in top currencies in Spreedly’s vault and the average success and failure rates for top gateways. Two caveats: we do not include fees associated with selecting a gateway and we limit our analysis to 2015 data and only consider gateways that have transacted more than 100,000 payment transactions on Spreedly.

Most popular gateways by currencies

Merchants offer their services to customers around the world and need to accept payments in variety of currencies. What are the most popular gateways for each currency? To keep the list short, we only focus on identifying the most popular gateways for the top 5 currencies in our vault, namely, United States Dollar (USD), Great Britain Pound (GBP), European Union Euro (EUR), Australian (AUD) and Canadian (CAD) Dollars. (Please contact us if you’re interested in other currencies.)

Table 1: Top 3 gateways for most popular currencies in Spreedly’s vault

From Table 1 we see that

1. No single gateway tops the list in more than one currency.
 2. PayPal is listed in every column except EUR. It competes with Stripe in GBP, AUD and CAD.
 3. Merchants using EUR tend to use European-based gateways RedSys, Ogone and WireCard.
 4. Top 3 gateways for AUD and CAD are the same but in different order.

Success and failure rates

A declined transaction can occur due to a variety of reasons that were extensively discussed in our previous article about credit card decline rates. Here we discuss the average success and decline rates for the top 21 gateways on Spreedly, presented in Table 2. There is a surprisingly large variation between gateways, and our goal here in sharing the averages is to at least give you a starting point to compare to your own declines rates. Spreedly customers can always contact us for data more specific to their transactions. If your gateways score well below Table 2, you might want to consider other payment alternatives.

Table 2: average transaction type success and decline rates for top 21 gateways on Spreedly

Choosing the right gateway that meets your unique business needs requires not only paying attention to the gateway’s fees, but also investigating other important parameters like currency support, success and decline rates and even the response time of the gateway. Comparing your gateway’s numbers with those provided above is an excellent starting point. In the future, we will provide a more in-depth analysis of gateway performance.


Originally published at blog.spreedly.com on October 9, 2016.

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