What to Consider When Choosing a Payment Gateway for WooCommerce and Magento

What to Consider When Choosing a Payment Gateway for WooCommerce and Magento

Research shows that customers have clear preferences regarding ecommerce store payment gateways. Their current preferences are, first, that a site be mobile-enabled and can accept mobile payments. Second, consumers want to know that their payments are secure. Third, consumers are sick of having to remember passwords and prefer biometric authentication. Lastly, consumers like to have financing options, such as buy-now-pay-later schemes.

With that information in mind, how do the leading web-building platforms address these four elements of ecommerce payment gateways? We did some digging to find out how well WooCommerce and Adobe’s Magento help merchants meet customer payment needs.

What Is a Payment Gateway and How Do They Work?

Let’s first define what a payment gateway is and how they work. A payment gateway is a platform through which a customer submits payment to an ecommerce merchant. Usually, payments go through a third party that handles customers’ credit card numbers, expiration dates, and other personal information securely. Examples of popular payment gateways are Authorize.net, PayPal, and Stripe.

There are two types of payment gateways for ecommerce sites:

  • A payment form directly in the store so that the customer pays without ever leaving the website. Think of Amazon and Spotify.
  • A payment form on the payment gateway’s website. To pay, the customer clicks a link and is directed to the payment gateway’s website. PayPal works this way.

The first option is better if you are a merchant because fewer steps for the payer mean fewer cart abandonments for you.

To create an account with a gateway, you create an account with the gateway provider, link the account to your business account, and add the payment gateway to your website. There are WooCommerce and Magento plugins that connect most gateways to your site.

When a customer makes a purchase, a secure link to the payment process opens up on the gateway, and the transaction is verified and approved. Next, your website receives a “success” message, the transaction is completed, and you receive the funds from the sale in your account.

Every payment gateway charges a transaction fee whenever a card is charged or for every purchase. The fee is a percentage of the transaction (between 2.5% and 3.5%), and a fee for each transaction, which is usually around $0.30. Some gateways also charge monthly fees, fees for certain types of transactions, and other charges.

Which payment gateway you choose will depend on your business. For example, if you plan to add international payments to your ecommerce store, don’t choose a payment gateway that charges high international fees.

Related: “Has WooCommerce Reached Maturity In Its Lifecycle? What Merchants Should Know About Tomorrow’s Web Hosting

What to Look for in a Payment Gateway—Mobile, Fraud Management, and BNPL

When selecting a payment gateway, your concerns as a merchant should mirror the concerns of the customer. As we learned, these are how easy it is to pay using a mobile device, how secure are the transactions, can the consumer log in biometrically, and what financing options are there (such as BNPL).

These should be the primary drivers when considering which ecommerce platform and payment gateway to use.

Another huge factor, of course, is how expert you are in installing plugins, and how much time you have to figure out the technology requirements. Adobe’s Magento is more complex than WooCommerce and requires a higher level of coding expertise.

While you are digesting that, here’s a closer look at how WooCommerce and Magento are addressing consumer preferences for payment gateways.

1. Mobile Payments

Mobile wallets are the most popular online payment methods worldwide. According to Statista, in 2021, roughly half of global ecommerce payment transactions used digital or mobile wallets. This share is expected to rise to over 53% in 2025.

Add to this the social commerce movement, where shoppers buy straight from ads that appear on their social media, such as Facebook, Instagram, and TikTok, the need to focus on mobile payments seems even more pressing.

WooCommerce and Mobile Payments

WooCommece has plugins for Stripe, PayPal Pro, Square, Authorize.net, and numerous other gateways. If you are not tech-savvy, choose a gateway that is easy to use. Stripe and Square are known to be easy options. WooCommerce has plugins for mobile-optimized gateways like Amazon Pay, Apple Pay, AliPay, and Google Pay.

For more on WooCommerce, read “Looking for An eCommerce Platform? 15 Things Merchants Should Know Before They Commit to WooCommerce”

Magento and Mobile Payments

Magento 2 comes with three default payment gateways. PayPal, Authorize.net, and Braintree. All are mobile-enabled.

The AIM version of Authorize.net is a regular payment gateway, the most common integration for Authorize.net, but it does not allow users to create recurring payments or save credit card information. It can only be used as a one-time payment, which means customers must enter their credit card details every time they make a purchase, which is likely to increase cart abandonment rates. However, the CIM (Customer Information Manager) version does allow merchants to store customer payment information.

Other mobile-enabled payment gateways that integrate with Magento include Stripe, Worldpay, and Amazon Payments.

2. Fraud Management and Secure Data

Merchants need to protect against hackers who target customer data, but they also need to protect themselves from customers who commit “friendly fraud.” Friendly fraud is credit card chargebacks and refund claims from customers who say they never received their order or did not place the order. Chargebacks are a burgeoning problem.

According to research from Sift, almost a quarter of consumers surveyed admitted to disputing purchases even though they were satisfied with the purchase.

For more on fraud protection, read: “How WooCommerce and Magento Are Tackling Fraud Protection

WooCommerce and Fraud Management

When a fraudulent transaction occurs through your online store, it’s critical to preserve your reputation by protecting your customers and minimize the hassle factor.

WooCommerce Anti-Fraud is a plugin to help merchants identify fraudulent transactions. The tool scans transactions and scores each completed transaction based on pre-determined scoring rules. The plugin blocks or pauses fraudulent orders based on the risk scores, checks for suspicious email addresses, blacklists those that indicate fraud, and sends alerts when a suspect order is placed.

Magento and Fraud Management

Magento’s fraud prevention plugin offers a simple and efficient solution to minimize fraud. When you identify a sales order that is unpaid or is called for a refund for questionable reasons, you can mark it as suspicious in the back end. This creates a record that includes various customer attributes used as a reference to automatically detect and block future possibly fraudulent orders.

Magento users can create custom blacklisting rules based on customer attributes, such as name, address, ZIP code, IP address, or email address or domain. The software can also blacklist suspicious orders based on failed transactions.

For more on Magento, read: “17 Things Merchants Need to Know Before They Commit to Magento as Their Ecommerce Platform”

3. Biometric Authentication

Consumers are highly concerned with the security of their credit card data when shopping online, but at the same time, they are sick of having to remember a billion passwords. According to a 2017 study by Visa, close to 90% of consumers were interested in using biometrics (fingerprint authentication) to verify identity or to make payments, and that was six years ago.

More recent research from PYMNTS.com finds that most modern consumers now see biometric tools powered by smartphones as the most secure way to authenticate a transaction, and it is the preferred authentication method for more than half of U.S. consumers surveyed.

WooCommerce and Biometric Authentication

For WooCommerce merchants who want to offer biometric login, they can install Biometric Login for WooCommerce on their store. Their customers can create biometric identities for rapid login and register their identities with their phone.

A plugin called Loginizer limits the number of login attempts by a user or attacker. If the number of attempts exceeds a certain limit, the IP address is blocked.

Also, Apple Pay uses biometric authentication (such as Touch ID or Face ID) and doesn’t reveal the card number to merchants. Once the transaction is authorized using the biometric, WooCommerce Payments processes the transaction.

Magento and Biometric Authentication

The Biometric WebAuthn Module for Magento 2 (Adobe Commerce) facilitates biometric web authentication for the customer at log in. Customers can use their smartphone and scan their fingerprint or use face recognition to log in to the website.

4. Embedded Financing Options Like BNPL

Consumers love embedded financing options like BNPL because they can pay through installments without adding to their credit card balance.

To give some idea of the exploding growth of BNPL financing, according to Statista, lending grew from $3 billion in 2019 to $77 billion in 2022 with growth of 2,400%. That growth is not expected to slow, and lending is projected to reach $143 billion by 2026.

BNPL is largely unregulated, but the Consumer Financial Protection Bureau is pressing for regulations. By using a third-party gateway provider, a merchant can be sure they are adhering to compliance and the shifting regulatory environment.

WooCommerce and Embedded Financing

WooCommerce supports BNPL through its Affirm WooCommerce Plugin. Provided you choose a reliable BNPL payment provider, it could reduce the likelihood that you will face payment fraud as the BNPL company manages the installment payments for your online store. The BNPL provider will look for red flags, such as customers that don’t keep up with payments, expired credit cards, and chargebacks.

The Wallet System for WooCommerce Pro is a digital wallet plugin that can help you integrate partial payment on your site. The manual wallet payment lets the customer choose the wallet amount, and the total wallet payment permits the total Wallet balance available for payment.

For instance, if the available amount in the wallet is $50 and the product price is $75, then the customer can use the partial payment feature.

WP Simple Pay is another option for BNPL that offers simple payment forms without the need for complicated payment APIs. Other options are Klarna Payment, PayPal Credit, Sezzle, and Afterpay,

Magento and Embedded Financing

Magento 2 sites can integrate BNPL using a default extension OneStepCheckout. Ecommerce store owners can also integrate BNPL with Klarna, Zip, and Openpay.

Optty is an independent extension that integrates with Adobe Magento to give direct access to BNPL providers worldwide. Merchants can use any BNPL provider across the globe with whom Optty is certified.

WooCommerce or Magento? Which Meets Customer Needs Best?

Both WooCommerce and Magento have an extensive range of plugins and extensions that merchants can use as payment options. The extensions facilitate payments through popular gateways, such as Stripe and Paypal, which are also mobile-enabled, secure, and include fraud management protection. Both WooCommerce and Magento also both offer biometric login and payment options with biometric authorization. Lastly, both web-building platforms have extensions to facilitate secure transactions and integrate BNPL schemes for customer financing.

Which platform best meets your customers’ needs? The decision may come down to how expert you are at managing and installing plugins. Magento tends to call for coding expertise while WooCommerce may be more suited to the smaller and less complex ecommerce store.

Take the complexity out of ecommerce payments. Contact Cartis Payments for expert guidance in selecting and integrating payment gateways for your ecommerce site.