What is a payment gateway? 

Payment gateways are a secure, automatic way to move a customer's billing information from your web site to your Internet merchant account. Without a payment gateway, you will still need a software program and/or special equipment to send the billing information to your Internet merchant account.

When customers place orders through your web site, they select the items they want to purchase, usually using a shopping cart software program, then they check out. They enter their billing information in their browser and send it to your web site through a secure SSL connection. Then, if you have a payment gateway, it automatically sends the billing information on to your Internet merchant account through another SSL connection. The customer's payment can then be processed and you can ship the customer's order, settling the order.

Payment gateways also offer other services, like help setting up your checkout page, integration tools to get the gateway to work with your shopping cart and your Internet merchant account, fraud protection programs, and tools for issuing refunds.

What does a payment gateway cost?

Authorize.net is one of the most popular payment gateway providers. It does not sell its payment gateway services directly, instead going through resellers, so the cost of Authorize.net varies depending on which reseller you go through. You can buy the Authorize.net payment gateway alone or as part of package, which may include an Internet merchant account. Buying a package usually gets you a discount on your payment gateway, and some Internet merchant account providers offer Authorize.net for free with an account. Resellers may charge a set-up fee ranging from $50 to $100, and per-month fees are usually between $5 and $10. Most Auhorize.net accounts also charge a transaction fee of 5 to 10 cents per transaction.

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Another payment gateway is provided by PayPal. Payflow from PayPal starts at a set-up fee of $179 USD, with a monthly fee of $19.95 and 10 cents per transaction. PayPal also offers more advanced payment gateway services for a higher set up fee and monthly charge.

When you are shopping for a payment gateway account, you can calculate about how much the fees will cost you by estimating how many sales you expect to make each month and how much profit you expect to make. By dividing your expected profit by your estimated fees you can find out what percentage of your profit will be going to pay for your payment gateway. Remember that your Internet merchant account will also be charging you fees on each transaction you make.

Once you have decided if you want to purchase your payment gateway alone or as part of a package, you can start shopping around for the best deals. Make sure you take into consideration all the fees you will be paying, including termination fees, as well as conveniences and features like customer support so your payment gateway fits the needs of your business.

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