The payment gateway battle. klarna vs afterPay vs paypal

Online shopping has not only become faster but also easier for us to buy everything we want thanks to payment gateways. . . (Even if we don't have funds immediately available!

Because they handle such sensitive information, it's important not to rush into choosing a payment gateway if it doesn't suit your e-commerce business and its needs.

Abandoned shopping carts are something every e-commerce retailer has to deal with. While this happens for many reasons, one study showed that 6% of people leave because of a lack of payment methods. Even if 6% isn't high for you, it's an easy number to avoid.

What is a payment gateway?

Whether you're a brick-and-mortar store or e-commerce, a Klarna payment gateway is the technology that processes payments at your store. Think of it as a middleman between your customers and your business bank account.

The payment gateway encrypts data transmitted between users, merchants and banks.

How does a payment gateway work?

When your customer buys an item on your online store, the payment gateway starts a series of jobs to finally process the payment.

The payment gateway can then process the payment in the following ways.

Payment Gateway Payment Gateway website.

Redirected page to enter their credit card information. For example, when you buy from ebay, you can choose to pay for the item via paypal. This will let you leave ebay and log in to paypal to pay for the item.

While this payment method can be considered more secure, the retailer will have little control as the customer's payment details are stored in the payment gateway's servers.

Pay directly on your website.

When a retailer is large enough, they often have the ability to hold payments on their own servers while keeping users safe.

You may be spoilt for choice when choosing between different payment gateways, as there are so many options. . . That's why we're going to discuss the pros and cons of our favorite payment gateways, including Klarna, paypal, and Afterpay.

Questions to ask when considering a payment gateway.

There are so many issues to consider when considering a payment gateway, and sometimes people can get overwhelmed. Here are the first questions we need to consider when choosing a payment gateway.

How long do you need to set?

How much would you like to spend?

How long will it take you to receive the money?

Do you need to pay internationally?

How safe is it?

How much support is provided?

What cards are accepted?

Do you offer automatic recurring payments?

Are custodial and non-custodial payments available?

Will it work with your existing or future integration system?

Klarna.

Klarna is a payment gateway in Sweden and is now one of the largest banks in Europe. They provide payment services to more than 60 million consumers at 130,000 merchants in 14 different countries.

It's fair to say that Klarna has exploded in recent years, with more and more retailers offering "buy now, pay later" services.

Benefits.

Klarna runs on most platforms including Remarkable comerce, Magento and Salesfor cecomer cecloud and is easy to integrate with.

Klarna offers customers three different payment methods for payment flexibility. You can pay within 30 days, pay in installments and have "slice" financing options for bulk purchases. This means customers are more willing to buy high-value products to increase your average order rate and revenue.

Your business is risk-free as you will always get an advance from Klarna. This means you don't risk waiting for your customers to pay.

Ensuring users pass a soft credit check before signing up for Klarna, your business can avoid fraud and credit risk.

Your customers are protected through a pre-authorization process and buyer protection policy.

Their business portal provides metrics to let you know how to improve your conversion rate.

Starting at 1.90%, payment gateway fees are relatively low.

Limitations.

You may miss out on valuable business as some customers are rejected due to "soft" credit checks.

There can be some confusion if a customer returns a product, or if they accidentally repay the business instead of paying Klarna.

PayPal

Most retailers are familiar with paypal because of their years of experience in the payment gateway game.

Benefits.

Cost will vary based on your sales. While costs can be expensive for small retailers, especially lower-priced items, for larger retailers they will certainly see a more reasonable cost of less than 2.9% (depending on their sales).

Safe because you must be logged into your account.

paypal offers online retailers a wide range of products, including credit options. This allows online retailers to choose what works best for their company.

Like Klarna, Paypal gives merchants one-click access to all financial data, allowing them to use their data quickly and easily to make decisions with ease.

If you're a subscription-based retailer, paypal ensures that setting up subscriptions is quick and easy.

Limitations.

It may take up to 3 days for them to process payments (in your account) via paypal. This means that if you are a small retailer, you must be able to provide enough cash flow on a daily basis to tide you over until payment hits your account.

As mentioned above, small purchases are expensive. For example, if your business only needs £1,000 a month, you will be charged a fee of 3.4% + 20p per transaction. This means that small purchases end up being less valuable.

Business and personal accounts can be suspended at any time. This may mean that your balance in paypal may be held for 180 days.

Due to the sheer size of babies, their baby customer service can be difficult to achieve. While their FAQ page has a ton of information covering different topics, sometimes you really need interaction to help you out and you might be stuck online for a while.

Afterpay (also known as Clearpay in the UK).

Clearpay is a UK sister company known as Afterpay's popular payment gateway. This "buy now, pay as you go" platform has really taken off.

Benefits.

There is no lengthy process for customer registration. This means that "buy now, pay later" is easier for your customers than other payment gateways.

Afterpay does not perform credit checks on customers when they sign up. This means they won't turn down any of your potential business.

Afterpay also offers seamless integration with several different e-commerce platforms.

They offer their clients zero percent interest. This means that customers will not abandon their purchases for high-value orders as they will not be charged any fees.

Restrictions.

Afterpay is interest free, Afterpay charges a 4% commercial fee on your transaction.

Some customers have negative reviews of Afterpay and they have had a bad experience with Afterpay. If they receive late payment or any wrong letter, it can tarnish your business image.

Choosing the best payment gateway for your business will largely depend on your current market position and your foreseeable future business strategy.