How Do Payment Gateways Charge Fees?

Do you know how payment gateways charge fees for processing transfers?

This article will introduce you to the business model payment gateways use to make money, listing all the fees they impose on merchants for accepting transactions online.

What is a Payment Gateway?

Acting as a bridge between merchants and their customers, a payment gateway is a financial service that allows businesses to accept transactions online.

In exchange for the service, the payment gateway charges merchants (and sometimes also their customers) a variety of fees for processing transactions (more on this later).

Businesses can integrate a payment gateway solution directly into their platforms, allowing customers to settle the transactions for their orders without leaving the merchant's website.

How Does a Payment Gateway Work?

Now let's see how a payment gateway works in practice. For a card transaction, the process should look like the following:

1. During the checkout process, the customer chooses to pay with a debit card on the merchant's platform.
2. The payment gateway shows a form directly on the merchant's platform or redirects the user to a separate page. While there, the customer provides their card details for the payment.
3. The gateway solution encrypts the user's financial data and transfers it to the payment processor through a secure channel, which sends a request to authorize the payment to the bank that issued the user's card.
4. After successful verification, the issuer accepts the payment processor's request and informs the gateway.
5. The payment gateway will then process the customer's transaction and distributes it to the merchant.

How Do Payment Gateways Make Money, and What Fees Do They Charge?

Now that you know the process payment gateways use to process transactions let's see what fees they charge for providing merchant services.

• Transaction Discounting Rate (TDR): When the customer's transfer is routed through the service, the provider deducts a percentage-based or a fixed fee (or both) before disbursing it to the merchant (the business is responsible for paying the TDR).
• International transaction fees: Some gateway solutions charge extra fees for processing international payments, which they can impose on both customers and merchants.
• Currency exchange fees: Payment gateways will charge an extra for transactions requiring currency conversions (usually paid by users).
• Maintenance and support costs: Some financial providers may charge annual fees for merchants for offering technical support and account maintenance.
• Monthly subscription fees: A part of payment gateways charge businesses an additional monthly subscription fee for online transactions.
• Setup fees: While some payment services offer gateway integrations without any extra costs, others charge enterprises a one-time fee for setups.

Are There Alternative Payment Systems to Traditional Gateway Solutions?

To avoid the expensive fees of gateway solutions, businesses can choose alternative payment systems instead to accept transfers online. Examples of such include:

• Bank transfers: Bank transfers are among the easiest ways to transfer funds electronically, and merchants can choose to accept them as an alternative to payment gateways.
• Cryptocurrencies: Digital assets like Bitcoin allow customers to settle their payments to merchants even on weekends or bank holidays. Also, as they lack third-parties, cryptocurrency transactions are inexpensive and usually get processed within an hour or less.
• E-Wallets: An e-wallet is a prepaid financial service that allows customers to manage their finances conveniently under one platform. Since digital wallets use their internal networks for transferring funds, they feature cost-efficient fees and rapid transactions.

Cut Your Fees With STICPAY’s Payment Gateway Service for Merchants

STICPAY is an excellent choice for merchants looking for a cost-efficient e-wallet solution to accept payments online.

STICPAY charges fees for the following:

• Deposits: It costs users 1-3.85% to top-up their STICPAY accounts based on the payment methods (Visa, MasterCard, UnionPay China, cryptocurrency, bank transfers) they choose.
• Withdrawals: Similarly to deposits, STICPAY charges customers a fee (usually between 1-2%) for withdrawing funds. Users can select local and international bank wire, UnionPay China, cryptocurrency, or STIC Card as the payment method for withdrawals.
• Currency conversions: If the currency used for the transfer is different than the base currency, STICPAY will charge users a conversion fee. However, this cost can be avoided by choosing local bank wire as the payment method or opening multiple currency accounts.
• Bank wire transfers: In addition to STICPAY's fees, banks may impose additional charges on both merchants and end-users for wire transfers.
• Internal transactions: STICPAY features a cost-efficient 1% fee for instant member-to-member transfers in the company's internal network. On the other hand, as businesses are responsible for covering the costs, client-to-merchant transactions are free for users.
• Payment gateway fees: STICPAY charges merchants 1.8% for accepting cryptocurrency and a competitive 2.5% + $0.3 fee for processing fiat transactions.

For more information, we recommend checking out STICPAY’s Fees page.

On the other hand, merchants will save on the following when setting up a payment gateway with STICPAY:

• Account maintenance
• Payment gateway setup
• International transfers (no additional fees other than the ones listed above)
• Monthly subscription fees

In addition to cost-efficient fees, merchants can take advantage of the following benefits with STICPAY:

• Global coverage in over 190 countries with a strong presence in Asia
• Advanced anti-fraud and security features with strict compliance monitoring
• Support for 29 currencies and 19 languages
• Convenient payment gateway integration via Open API and simple documentation
• Limited risks of chargebacks as all transactions are secure and indemnified
• Numerous payment methods for deposits and withdrawals, including Visa, MasterCard, UnionPay China, cryptocurrency (Bitcoin, Litecoin, Ethereum), as well as international and local bank transfers
• Convenient access via a web platform and recently redesigned iOS and Android smartphone apps
• 24-hour customer service

Are you ready to get started?

Create a merchant account at STICPAY now!

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