The most comon question i am asked by my clients, is whats the Best/Cheapest Payment Gateway to use!!!

Well for those who are a little confused to what a payment gateway is, it works like this

• You choose the things on a website you want to buy
  
• Go through the checkout system as usual
  
• The cart transfers you to a Payment Gateway Which is usually owned by a bank (sometimes it looks like your still on the original site, but actually its an illusion, your usually being passed to the Payment Gateway still)
  
• You then need to pay for the products using a Debit/Credit card (or an account of some form linked to your bank account depending on the Payment Gateway )
  
• The Payment Gateway then takes your money, which is passed into the bank account of the website owner
  
• The Payment Gateway then sends you back to the website with a special code hidden to tell the site if the payment was accept to not
  
• If accepted the invoice is changed to say completed, if not it is changed to say failed.

Its actually very simple, what's difficult is how the Payment Gateway charges you.

Here are the most common charges the gateway will charge the website owner

• A percent of the transaction
• A fixed cost per transaction
• A Monthly Fee
• An Annual fee
• A set up fee
• Withdrawl fee

So when you work out which is cheaper for you, it depends on hwo your going to use it. For example if you take one transaction per month, then no set up fee, no anual fee, and no montly fee is what your looking for. As when you divide those costs out over your the transactions they will cost you a fortune per transaction.

But if you were for example Marks and Spensers, then those fixed costs wouldnt be an issue, as when you divide them over many thuosands/millions of transaaction they will work down to a very small percent of one pence.

But if you also if your paying

• 3.4% of the transaction cost plus no fixed cost or
• 0% of the transaction but £1 per transaction fixed cost

then it depends on what kind of transaction your taking. If your selling cars, then a percent will cost you a fortune, but if your only paying £1 for that transaction then it is extremely good for you. But if your selling Chocolate bars, then £1 per trasaction is going to be a more than your making from the sale.

And then it gets more complicated

If your selling expensive items like Plasma TVs for £1000 at lets say 1 per day, and the gateway holds onto your money for 30 days, that means you may need to have an over draft to cover the costs of the 30 day of about £30,000, whcih will charge you interest as well.

So one gateway that costs you almost nothing but holds your money for 60 days, could actually cost you more than a gateway that charges more, but releases the money staright away.

So to work all this out, we have spent 2 yrs designing and developing a site that calculates all this info against each gateway, to see if there is a way to work out which is the cheapest solution for you.

www.paymentgatewaydirectory.com

We expect it to be live by the end of August 2008, but you can see an example of how it will work here
www.paymentgatewaydirectory.com/demo2
Thats not a working site, just a HTML model of it :)