Top payment gateways for eCommerce 2024

Online shops have become popular in recent years. Many of them offer various payment methods for customer convenience. They use payment gateways such as Stripe or Paypal to support payments made with different credit cards, debit cards or e-wallets. This article will introduce and compare several common online payment methods on the market. As you read through, you’ll learn about their application procedures, fees as well as limitations.

What is a payment gateway?

A payment gateway is a third-party payment system that connects the online shop’s financial institution and the customer’s bank for transactions. It usually uses encryption technology to transmit credit card and bank card information to ensure secure online transactions. Most online shops rely on such systems, such as Alipay and WeChat Pay, to receive online payments. 

Types of Payment Gateways

• Redirects: the online shop redirects customers to a separate page of the payment gateway, such as PayPal, to complete the transaction.

• Checkout on-site, payment off-site: The front-end checkout occurs on the online shop’s page, but the payment process happens through the gateway’s back end.

• On-site payments: Usually adopted by large-scale businesses. Customers complete every step of the transactions on the online shop’s page, including checking out and processing the payment.

Common electronic payment methods

Common electronic payment methods in online shops include credit cards, debit cards and local e-wallets, such as PayMe, AlipayHK and WeChat. Some online shops accepting overseas payments also support various “Buy Now Pay Later” payment methods.

Virtual credit cards and debit cards

Credit cards and debit cards are the main payment methods in online shops. Nowadays, many people use virtual cards which function the same as physical cards. As long as the customer enters his/her card number, name, card expiration date, and CVV (Card Verification Value), he/she will be able to make the payment. Customers can also add their credit cards and debit cards to Apple Pay or Google Pay for more convenient checkout.

Online payment methods in Hong Kong

Many people in Hong Kong use local online payment methods, such as AlipayHK, WeChat Pay and FPS, to pay online shops nowadays. They are usually redirected to the online payment platform’s mobile app to complete the transaction.

Buy now, pay later

“Buy now, pay later” means when a customer places an order, the third-party payment platform bears the purchase cost fully or partially first, and the customer should repay the corresponding owing amount in installments within a specified period later. It is a type of short-term financing that allows customers to purchase products and services without having to commit to the full purchase amount up front. “Buy now, pay later” platforms include Klarna and Afterpay, which are commonly seen in overseas markets. Although both of them are not available in Hong Kong at the moment, local online shops targeting overseas markets can enable “Buy now, pay later” payments on Klarna and Afterpay by connecting to a payment gateway.

Introduction and comparison of common online shop payment gateways

PayPal and Stripe are the most common online shop payment gateways globally. Trending e-commerce platforms, such as Shopify and SHOPLINE, which help small businesses build an online store, also launched their own payment gateways.

PayPal is the largest payment gateway worldwide. Online merchants can register for free to receive customer payments made with credit cards, debit cards as well as PayPal Credit. Customers are redirected to PayPal’s page from the online shop’s site to complete a transaction. Reputed as a time-honored brand, PayPal is equipped with comprehensive security encryption technology but comes with higher handling fees than its counterparts at the same time.

Meanwhile, Stripe focuses on simplicity of use. Similar to PayPal, it offers free registration for online merchants. In addition to credit cards and debit cards, Stripe supports payments made with e-wallets, such as Apple Pay and WeChat Pay, making it suitable for online shops targeting the mainland market. By using Stripe, customers can complete the whole transaction directly on the shop’s site, which can benefit the shop’s conversion rate.

*Data updated as of February 21, 2024. Refer to official websites for the latest information.

Limitations of common online shop payment methods

Transaction limits, handling fees and the time needed for transaction processing and settlement are all limitations of online payment methods. Transaction limits for different online shop payment methods vary. Some apply to every individual transaction, while some apply to the total monthly transaction amount. Some payment platforms take up to 7 days to settle a transaction. 

For online shops which mainly sell small-value products or services, handling fees would be a relatively large expense, especially if transactions are frequent.

How should online shops choose an online payment provider plan?

When choosing online payment providers, online shop owners should consider the following points:

• The site speed of its online shop after integrating with the online payment platform

• Transaction speed

• The number of supported payment methods

• The price of the plan as well as handling fees

• Security authentication system

• Value-added services, such as data analysis, fraud and risk management

• Technical and customer service support

Airwallex’s all-in-one payment gateway designed for e-Commerce

Airwallex offers an all-in-one payment gateway that allows online shops to accept payments from customers across the globe with fast and flexible settlement in multiple currencies. Online shops can accept payments made with credit cards as well as over 160 local payment methods by only installing drop-ins and embedded elements in a one-off integration. The 160 local payment methods include FPS, AlipayHK and WeChat Pay. “Buy now, pay later” payment platforms such as Klarna and Afterpay are also supported.

Shop owners can get paid in over 170 currencies around the world and improve conversion by offering their customers more than 70 payment methods, such as Alipay and WeChat Pay. They can also eliminate costly foreign exchange conversion fees and maximize their profit by collecting and settling funds in the same currency.

Application procedures and required documents for Airwallex’s payment gateway

New clients of Airwallex have to register an account and submit KYC (Know Your Customer) documents. If applying in Hong Kong, the following documents are required (details):

• For limited companies: Certificate of Incorporation, IDs of the authorized person and UBO (Ultimate Beneficial Owner)

• For sole proprietorships: Business Registration, IDs of the authorized person and UBO (Ultimate Beneficial Owner)

• For partnerships: Business Registration, Partnership disclosure and declaration form, IDs of the authorised person and UBO (Ultimate Beneficial Owner)

FAQ:

1. What are the common options of online payment gateways and what are their limitations?

PayPal, Stripe and AlipayHK are all common online payment platforms. All of them have limitations, such as the time needed for transaction processing and settlement as well as handling fees per transaction. Some payment gateways set transaction limits for every individual transaction or the total monthly transaction amount.

2. Does Airwallex have a license and is it secure in Hong Kong?

Airwallex meets international security standards, including PCI DSS, SOC1, and SOC2 compliance. It is also regulated by the Customs and Excise Department and holds a Money Service Operators license (MSO License No. 16-09-01929).

3. Is Airwallex an e-wallet?

No, Airwallex is not an e-wallet. Users can transfer and receive payments after registering for a global account. They can also use the Airwallex Borderless Cards to pay in multiple currencies around the world anywhere Visa cards are accepted.

References:

1. https://stripe.com/zh-hk/pricing

2. https://www.shopify.com/hk-en/pricing

3. https://blog.shopline.hk/payment-gateway/

4. https://www.paypal.com/hk/webapps/mpp/merchant-fees