Just because a payment gateway is the most popular in your country doesn’t make it the right choice in China. What to Look for in a Payment Gatewayīefore deciding which payment gateway to use with your online shop, you must possess insight into the behavior of the local buyers. Once the money is deposited into your merchant account, the funds will then be transferred to your official business account. However, they are different from a normal bank account because you do not have control over it. The merchant account is a kind of bank account where the money of a successful transaction is deposited. If everything is found to be legit, the payment processor authorizes the transfer of funds to the merchant account. They verify the validity of the card, fund availability, determine if monthly limits have been exceeded and so on. They exchange communication between the cardholder’s bank and the merchant account. These are the financial institutions that authorize the transaction and handle the movement of money. The information collected by the payment gateway is transferred to the payment processors. It acts as the mediator between the transaction on your website and the payment processor. Its function is to accept an online payment on your E-commerce site. We have already explained that the payment gateways are like the sale terminal we use at any brick-and-mortar store. Let’s consider what the differences are between these three elements. To finalize the purchase and for you to collect the money three elements must work together: the payment gateway, the payment processor and the merchant account. What Is the Difference Between a Payment Gateway, a Merchant Account and a Payment Processor?Īlthough a customer may buy something online in a matter of seconds, during this short period of time a lot is going on behind the scenes. Therefore, payment gateways must be integrated if you want to create an environment that gives your customers peace of mind and an incentive to buy from you. It is very important to understand the psychology of a buyer to close a sale. Local consumers will tend to have less trust in websites that only accept payment by credit card. Hence, while some Chinese consumers can buy online with credit and debit cards, mobile payment options are what most Chinese consumers expect at checkout. While most developed economies went from debit cards to credit cards and are only now switching to mobile payments, China mostly skipped credit cards and went straight to mobile, with a 87.6% penetration rate for mobile payments in 2021. Are Payment Gateways Really Necessary for E-commerce in China? With its unique E-commerce ecosystem and mobile payment-dominated payment infrastructure, China’s market requires merchants to adapt to payment gateways specific to China. While in the West, PayPal is one of the most popular E-commerce payment gateways, it is not popular in China. By adding a layer of security to the transactions, customers feel safe and, in turn, are more likely to buy.Īdditionally, payment gateways are available 24/7, support several forms of payment, including credit cards, debit cards, and mobile payment via digital wallet and come with real-time reporting tools to track your sales performance. They offer a series of advantages for both merchants and buyers. Payment gateways can be easily integrated into the most popular E-commerce content management systems (CMS) like Adobe Commerce and PrestaShop. A payment gateway works exactly the same way on your website. Once you insert your card into it, your card information is processed, and the payment is authorized. Think about the physical point of sale (POS) terminal you find at any brick-and-mortar store. What Is a Payment Gateway?Ī payment gateway allows you to collect money from your customer’s credit cards, debit cards, or digital wallets when they buy something from your online shop. However, when selling from your standalone E-commerce website, you must offer Chinese consumers payment methods that they trust and make them feel at ease.įor this reason, it is essential for you to understand what the payment gateways are and which ones are the most trusted in China. When shopping online, the average Chinese consumer has no hesitancy when buying from big marketplace platforms like TMall, Taobao, JD, and so forth. Choosing the right payment gateways to collect money from your customers is critical for a successful E-commerce website in China. China’s E-commerce market is the largest in the world, reaching 2.8 trillion USD in 2022 according to Insider Intelligence, over 2.5 times the size of the US’s E-commerce market.Ĭreating an E-commerce website to take advantage of China’s massive E-commerce market could be lucrative, but only when done correctly.
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