What Is a Payment Gateway?
No matter what kind of application you are developing for mobile devices - be it an e-commerce, music streaming, or travel app - you need to provide your customers with the opportunity to pay for goods or services they have chosen. Most payments nowadays are made via mobiles. It concerns retail sales, customer services, or any other types of merchandise. The customer experience has to be smooth here to provide sustainably high conversions to your business. Statistics argue that about 55 percent of all sales were made online in 2021, and this amount is continuously increasing. Therefore, your company’s mobile app has to integrate a convenient and easy-to-use mobile payment processing gateway.
We are not speaking now about the in-app buys of digital products. Most of them are performed via Google Play Store for Android or Apple’s App Store for iOS. These well-appreciated and massive platforms have their own software and solutions for meeting all their purposes. This article explains how to incorporate online payment gateways in your company mobile app to purchase real items and services like T-shirts, hotel rooms, and train tickets. You also need to know the most popular payment gateway providers and how to pick the best one for credit card payment Android or iOS integration.
Let us introduce this technology that helps make debit or credit card payments on mobile phones or websites. It is essential for your company’s extension and increasing revenue, too. Understanding how it works is important to make the right decisions on how to improve your business performance in this way.
A payment gateway collects financial information from customers with the help of the frontend development in your mobile application and transfers it to the payment processor or bank that is meant to accept this payment. Such transactions should be safe and secure, so making mobile app payment integration protected is one of the most essential tasks of all experienced developers.
The e-commerce payment gateways work in the following way:
1. A buyer chooses a product or service and adds it to the shopping cart on the online store or service-providing website.
2. The cart is connected to a specific payment gateway service that asks the user to provide credit card information.
3. The user fills in the information and checks out.
4. The gateway sends this request to the bank that has issued the card.
5. The bank approves the transaction, and the payment is transferred to your company’s merchant account.
A merchant account is a very important part of the entire transaction alongside the gateway service provider. You need to choose the type that best suits your commercial needs and security purposes. There are two basic types of merchant accounts - dedicated and aggregated ones. Hence, let’s look at both of them in detail.
All gateway providers, such as PayPal, Stripe, Braintree, and others, are interested in the best functionality of both a gateway and a merchant account. The latter is the place where the money should be transferred after the customer’s payment was approved and stored there until it is transferred to your bank account.
Therefore, a merchant account is not a bank account. It is meant for sales and payments and accumulating money from them. Only after the payment arrives at your merchant account and is not withdrawn, it can be transferred to your bank account.
You may wonder why this additional layer is needed. The most essential reason here is that your customer may want to return an item or refuse the service and ask for a refund. You can make this refund easily from the costs accumulated in the merchant account. All other accumulated costs will be sent to your bank account. Therefore, you need step-by-step integration of merchant in-app payment to ensure it works smoothly.
A dedicated merchant account is made specifically for your business, so you can directly control all the financial operations. It also allows you to correct errors occurring in transactions or debit the costs if you have to pay back a refund. All the transfers will be faster - you can complete them within a day. However, you will need to pay more for opening and maintain such an account.
That is why many businesses prefer to open aggregated accounts. They are more extended because they collect funds for multiple merchants. Such an account is less expensive, and you can receive approval for its opening within only 24 hours, while it will take you a few days to approve a dedicated account. In addition, an aggregated account does not require as much KYC (Know Your Customer) documentation as a dedicated account does. Anyway, the choice is yours, and you have to consider all pros and cons of both variants.
Credit Card Payment Integration
Payment gateways can process all transaction data related to credit cards via their APIs. When you decide to apply the payment gateway integration in a mobile application via your server’s API, you take responsibility for your financial security because all the data now will be passing through your app.
You also need to consider whether the chosen gateway supports a tokenization process. It should be authentical to accept payments from customers via a mobile app. The problem may be in the possibility to store configuration settings and ensure proper authorization. These functions are usually performed by tokens and are required by the Client SDK. If you integrate the payment gateway API, tokens will be handed back from the securely authenticated environment of your server. All the submitted data of the card are represented by the token, so such a token can complete real-time transactions.
The specific client’s code is created during the integration process, and the token in it is in the form of a line for the Base64 encrypted JSON model as in the case of Braintree. So, the client receives the token that works with the Braintree Client SDK to connect with the provider’s server and ensure payment completion. Such a properly created line or string actually describes the payment method, like a credit card or PayPal, and goes to your server where it performs the corresponding payment operation.
Tokens can also be generated on the client side, as in the case with Stripe. The Stripe server will send them to your server, but they won’t be encrypted lines as with Braintree. It’s you who will choose the best solution for sending the token to the server, and encryption will also be your own responsibility. Or you may decide not to use encryption at all. Though using encryption may seem mandatory, it is not necessary in many cases. The only thing is that the Stripe server may need to use an SSL connection on your server for better interaction because it has an HSTS protection mechanism that can block it.
The tokenization function may not be provided by the gateway APIs at all, so you have to think about your preferences beforehand or discuss the best integration ways with your app developers.
You also need to remember PCI-DSS. It is required by most payment-collecting services. The abbreviation means the Payment Card Industry Data Security Standard. So your credit card payment gateway provider has to be PCI-DSS compliant. You can check it in the Visa Global Registry. Such providers as PayPal or Stripe ensure this compliance with PCI-DSS requirements. They have massive Android and iOS native libraries and can turn any encrypted credit card data into a token.
Every payment gateway provider may have specific features that differ a lot from all others. So, you will need help from experienced app developers to integrate the chosen payment gateway with your mobile app. They may also differ in prices and subscription policies, so you need to be aware of all their specifications.
You know now how the payment integration in iOS and Android works and how to choose the most appropriate gateway provider and software for your business needs. We have mentioned three examples here - PayPal, Stripe, and Braintree - though there are many others. Those three are the most popular and widely used ones. However, they differ a lot in some aspects of technical characteristics, ways of use, and prices from each other.
Remember that, if you need extensive customization or an integrated checkout, you have to opt for a premium plan or subscription, and it may be a bit more expensive. PayPal is a prominent start-up solution, while Stripe can be tailored to larger companies with complex SaaS and extended marketplaces. You may also consider Braintree as the most optimal solution for any type of business.
You will need to check the geographical coverage of a payment gateway provider, too. There are some countries where the most prominent providers do not operate. We can offer the best country-specific payment gateways to you and help integrate them into your company’s mobile app.