E-commerce Essentials: Online Payment Gateways

A quick guide to Singapore’s most favoured payment portals  

If you’re running an online business, you should know online payment gateways are a key factor for your success — studies have shown that 50% of online shoppers would cancel their purchase if their preferred method of payment isn’t available.

Choosing the ideal payment gateway is not as stressful as it sounds — all you need to learn about are the 3 Ps: players, procedures, and pricing.

The Players

Who are the players in an online transaction? That would be the merchant (you), the consumer, and technology. As a merchant, you’ll have to partner with a merchant bank in order to accept online payments. Online payment gateways (the tech player) link a consumer’s shopping cart and the card processing network. In other words, they handle the process between the merchant and banks.

The Procedure

The procedure of an online transaction is as follows:

  1. A consumer buys an item on your site with a credit or debit card.
  2. The shopping information is sent to the payment processor through the payment gateway. This information is encrypted for privacy.
  3. The payment processor sends a request to the customer’s issuing bank, asking for the money to complete the payment.
  4. The issuer responds with a yes (approval) or a no (denial).
  5. If approved, the payment processor tells you the transaction is accepted, and also tells your merchant bank to credit your account.
  6. The funds are now available in your merchant bank account.

The Pricing

It’s important to take note of some the additional fees you’ll have to pay when engaging an online payment gateway. Processing fees are pretty common — the payment processor (who might also be your merchant bank) charges a fixed-rate fee every time you process a transaction. There’s also the assessment fee, a pre-negotiated percentage fee charged by the credit card association (Visa, MasterCard, etc.).

The 3 Ps are online payment gateway basics that every e-commerce business owner should know. But even then, you require more research before making your final decision. Shirley Ting, Senior Marketing Executive of Work+Store, shares with us some of her experience in working with small businesses and online payment gateways.

E-commerce owners in Singapore are spoiled for choice when it comes to payment gateways. Can you tell us about some of the local payment gateways available?

There’s BrainTree (under the PayPal umbrella), which is supported in many countries and boasts easy technical integration.

There’s also NETS, owned by a few of Singapore’s largest banks. NETS is the most popular payment gateway option in Singapore, with eNETS accepting credit and debit card payments and direct debit online. However, NETS’ technical integration is also the most painful due to their old API (Application Programming Interface) and their attachment to Internet Explorer.

Other well-known payment gateways used here include WorldPay Singapore, GTPay, Red Dot Payment, and Smoovpay.

What are some considerations to keep in mind when choosing a payment gateway?

  1.  Analyse the compatibility of the online payment gateway and the shopping cart platform on your online store. Ask yourself: is it SaaS, open-source, or self-hosted?
  2. Learn how customers’ credit card data is collected. That contributes to the user experience and level of digital security. Credit card details collected via a payment form on the online store, or redirection to a hosted payment page is more secure.
  3. Keep in mind the amount of local customer support the payment gateway offers. Choose a local provider if necessary.
  4. Consider the nature of the business and your target audience — are your consumers from other countries? If so, consider gateways that support multi-currency, are subscription-based or feature a recurring billing option.
  5. Look at the gateway’s payment flow and settlement cycle. How many days are needed before the payment is released to the company bank account? Cash flow is especially important to smaller businesses.
  6. And finally, how easy is it to integrate the online payment gateway with the platform you are using? A payment gateway like eNETS is powerful but can be technologically challenging to work with, especially from a consumer’s perspective.

How do you select the right payment gateway for your business?

Third party payment processors offer quick and easy integration for websites, which appeal to smaller businesses with smaller sales volumes. More established businesses, such as those selling luxury products, may prefer setting up their own merchant account to enjoy longer-term profits and discounts on the per-transaction fee.

What are some of the security risks of e-commerce, and how do you mitigate these risks?

A major risk is not knowing how customers’ credit card data is collected. If a website wants to collect confidential information before passing the information on to the payment gateway, the website should be Payment Card Industry (PCI)-compliant. Otherwise, the business will be held responsible in the event of a breach in digital security or data leak.

What are the pros and cons of choosing an international payment gateway such as PayPal, versus a local payment gateway?

PayPal is better at facilitating online payments for businesses that have offices in various countries. It’s also a potentially easier for technical integration, and is able to support a wider range of shopping cart platforms. However, businesses pay higher rates when using PayPal. Local customer support is also slow, and the settlement cycle is a lot longer compared to local payment gateways.

Local payment gateways offer customer support immediately, and are able and willing to do customisations of their services. They also understand the local business culture better than international payment gateways. The downside is that local payment gateways may support only certain shopping cart platforms, and prefer to work with large businesses. 


If you’d like to learn more about online payment gateways, here are some useful links:

How To Choose The Right Payment Gateway

Singaporean Payment Gateways Supported by Shopify

How To Accept Payments Online – Payments 101