Some dropshippers think that a single payment gateway is more ideal than multiple payment gateways because it makes payment processing simple. Yet some of them prefer having multiple payment gateways because they will be able to earn more by providing different payment options, not only within their country but from other countries as well. If you’re looking for the best option for your dropshipping business, there are things to consider when determining the number of merchant service you’ll need. I will explain the pros and cons involved in single payment gateway and multiple payment gateways below.
Single Payment Gateway
A single payment gateway simplifies the payment process in your dropshipping business. This is very convenient especially if you are managing multiple stores. However, each payment gateway has limitations.
Gateways only support specific types of cards or payments.
Some payment gateways claim that they have the universality advantage over other payment gateways. Yet, they don’t divulge which particular card providers and processing portals whose payments they can’t accept.
Based on a Statista report, PayPal is a very popular choice with merchants including online vendors, particularly in North America. If you’ll not use PayPal in your business, you’ll likely lose more customers than gain them. Using only one type in selling dropshipping products can cause some customers to abandon their carts when you’re payment gateway does not support their credit cards. Abandoned carts equate to opportunities lost for you.
You may not be able to sell to international shoppers.
If you are targeting customers from other countries to buy dropshipping products from you, you should have more flexibility with your payment options. You have to ensure that your payment gateway can handle payments like Alipay for example, which is a widely used payment option in China, and it can offer static fees for both local and international transactions. Some payment services like Amazon Pay imposes more for “cross-border” commerce which means higher prices for your international customers.
There are security flaws.
Many customers are wary about placing orders online due to concerns about the security of their data. Many premium payment gateway are deemed secure yet there are some limitations that you’ll have to consider.
- The probability of malware detecting your password and accessing your account to perform a fraudulent transaction that looks legit through secure payment gateways.
- The TLS encryption aids many payment gateways in managing the processing of privileged information like card information but once the data is uploaded in the server, they are at risk for data breaches.
- You’re not certain who is issuing mobile payments in your customer’s mobile device to pay for dropshipping products. If it’s not the account owner, there’s a high probability for complaints and refund demand.
Multiple Payment Gateways
The use of multiple payments may solve the limitations that a single payment gateway brings yet, they have disadvantages too. These are the pros and cons that you have to weigh when choosing this option.
Providing multiple payment gateways in your dropshipping business can be more profitable for you because of the following benefits:
Convenience for customers. Customers always expect that they will be able to pay for their items with the type of payment that they are using for online transactions. If they couldn’t find their preferred payment option in your store, they will just abandon their carts and move to another store selling the same drop shipping you have. With multiple payment gateways, you’ll be able to accept all forms of online payments including mobile payments and all kinds of credit cards.
Secure shopping for customers. A survey of online shoppers revealed that 40 percent were more comfortable purchasing products from an online merchant that offers various payment methods than stores who only use one payment option. By providing multiple payment gateways to dropshipping customers, you are conveying to customers that you are a trustworthy business and they’ll be more secure in buying from you.
Additional profit from international customers. If you’re to sell dropshipping products internationally, multiple payment gateways are more advantageous for you because payment gateways differ in terms of currency, region, and country. International shoppers trust drop shippers who accept payment in their countries’ currencies. Having a payment gateway that can automatically convert the prices and fees in your website to local currency would be more convenient for your customers and could result in a lower rate of abandoned carts.
Back-up payment gateways when a gateway crashes. Payment gateway crashes are common during sale events due to tons of transactions that they have to process. As a consequence, you’ll be missing sales while your gateway provider is trying to fix the problem. Not only that, you’ll be bombarded with complaints in your social media pages and email from disappointed customers who were not able to get the products they want. on the promo deals that you advertised to offer.
When you have multiple payment gateways to use, you’ll be able to offer customers to use the other gateways instead without losing their business.
Multiple payment gateways have many benefits yet it has its share of disadvantages as well. These include:
- Paying more due to multiple contracts, setup, and integrations. You’ll have more paperwork to attend to plus you’ll have to monitor and pay multiple fees for processing, membership, and transactions. There is also the need to open merchant accounts for each payment gateways so you can accept payments from your customers.
- Having a hard time getting volume pricing that can reduce your rate. This is an advantage that a single payment gateway offers to drop shippers. It will be easier to break into a high sales bracket with it than multiple payment gateways with split sales that will take more time and transactions to achieve the same goal.
The Bottom Line
Payment gateways are not only for receiving, storing, and transmitting your customers’ information, they can also influence customers to trust you. They convey something about your dropshipping business and what you value as a dropshipper. If they don’t recognize your payment gateway, the customers will not be comfortable doing business with you. Can you afford to lose the sales from the traffic that you have invested huge ad budgets on?
So, choose your payment gateways wisely. I have laid out the pros and cons of selecting one payment gateway and multiple payment gateways, the final decision now lies with you.