Pros and Cons of E-Commerce Payment Options

online payments pros cons

marketing planChoosing between popular e-commerce payment methods to grow online sales for your small business

There are a variety of payment options designed to accommodate e-commerce sites, but is there one superior technology a business should choose based on customer base, size, industry or growth strategy?

Here are some of the pros and cons that three popular e-commerce payment options offer to help you determine which method is most likely to increase your operating efficiency and ensure you provide exceptional customer service.

Hosted Payment Gateways

Hosted payment gateways essentially direct buyers away from a businesses e-commerce website to a secure hosted payment gateway to finalize checkout and payment made by a credit card, debit card or ACH transfer. Because many hosted payment gateways accommodate transactions in multiple currencies and offer recurring billing for specific vendors, they can provide invoicing efficiencies and increase the breadth of clients that businesses are equipped to sell to and serve, while eliminating the need for manual currency calculations.

Hosted payment gateways also provide significant risk management benefits, provided the payment processor is PCI compliant (a status you can verify at the PCI Security Standards Council’s website). In such a case, the vendor is tasked with ensuring that consumer data handling and security processes remain compliant with the latest versions of PCI security standards.

The cons? Though many hosted payment gateways now offer the ability to “brand” the checkout page so the customer isn’t startled by a change in the look and feel of the checkout experience, transacting at a third party website inherently means loss of control for the selling business. Should the payment gateway processor experience temporary issues on their own server, for example, your business may be helpless to avoid temporary service outages, which can result in lost sales.

Mobile Payments

Forrester Research ranks “mobility” as its No. 1 prediction for the e-commerce sector in 2014, and its research also indicates that m-commerce (shopping and completing transactions by way of mobile devices) will become a key aspect of online sales for consumers and in B2B environments. The challenge with m-commerce, however, is the many buying and selling scenarios it can encompass, and the new technologies that are constantly coming to market. That said, experts at Enterprise Mobility Exchange predict that the use of mobile devices in a corporate setting will become increasingly prevalent. To accommodate this new m-commerce business environment, sellers must ensure their payment acceptance methods are equally usable from a desktop computer, various mobile devices and within apps their B2B customers may use on a mobile device.

The pros? If your business sells off-site at trade shows or industry conferences, for example, accepting mobile payments by plugging a small device (called a dongle) into the jack of a smartphone and swiping the buyer’s credit card to complete the transaction leads to greater conversion and return on your marketing investment.

The challenge? Ensuring that the credit payment processor you use is integrated and equipped to provide an omnichannel experience for you and your customers throughout all phases of the transaction, whether conducted from a desktop, a mobile device or an app. Not to mention keeping abreast of the ever-changing mobile behaviors and payment options that have recently come to market, including mobile wallets like Apple Pay.

Virtual Currency

Major brand names like Dell and eBay now accept virtual currency on their e-commerce platforms through partnerships with third-party payment processors that facilitate the transaction. Virtual currency benefits for businesses include the ability to transact with global consumers who may not have access to a traditional financial system supported by credit cards and wire transfers. Other benefits include low fees, quickly receiving payments after sales, and less risk of accepting a bad check or a fraudulent credit card that later results in a chargeback.

The risk? The payment method is still in “early adopter” mode; best practices for managing the virtual currency are still being experimented with and formulated on a test-and-learn basis.

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Kristen Gramigna

Chief Marketing Officer at Bluepay
Kristen Gramigna is Chief Marketing Officer for BluePay (, offering mobile credit card processing services. She brings more than 15 years of experience in the bankcard industry in direct sales, sales management, and marketing to BluePay and also serves on its Board of Directors.