Friday , March 1, 2024

Transactions Alone Are Not Enough for Payment Gateways

As clients of payment gateways turn to them for more than connectivity to multiple processors, choosing a gateway becomes more complex. The 2022 edition of The Strawhecker Group’s Payment Gateway Directory hopes to help with that, even as gateways’ role expands.

Payment gateways are a key driver in the payments industry. They’re involved in integration, open architecture, and many other aspects, says Cliff Gray, senior associate at Omaha, Neb.-based Strawhecker. “The better gateways are doing this really, really well,” Gray says. “They’ve been polishing these API sets. They know how to serve them to ISVs and programmers very well.”

APIs are software code to ease integration of software with another program. APIs have become more important because integrated payments has gained more favor among merchants and payments companies. Independent software vendors (ISVs) often have a central role in providing the software with these payments integrations.

Gray: “No gateway is competitive any more if all they do is transactions.”

“The gateways are the front end today,” Gray says, referencing the customer-facing aspect of payments. “These front ends have gotten so good at communication with developers and working with developers in the ISVs that are the sales channels today.”

Payment gateways today must offer more than multiple processor connectivity, he says. They need to offer acceptance of multiple payment types well beyond branded credit cards, Gray says. Wallets, peer-to-peer payment methods, real-time payments, and automated clearing house payments are essential.

“They need to have some broadening of their functionality at least for integration and smoothing the path perspective,” he says. “No gateway is competitive any more if all they do is transactions.”

Gateways are going to continue to evolve. Some, such as prominent players Stripe Inc. and Adyen N.V., may eventually evolve to the point they are able to process the entire transaction on their own, Gray says, rather than rely on a processor on the back end.

The directory includes more than 3,500 data points on more than 110 gateways. Data includes setup fees and how much they are, the gateway’s geographic service area, whether it accepts card present transactions, which integration models does it offer, and details on support for multiple software development environments.

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