Mobile payment gateway – what secrets does it hide?

According to Statista, nearly 73% of people made online purchases with their mobiles in 2021. What’s more, in 2019, only 6.5% of the total e-commerce transaction value came from mobile devices. But come 2020, the number of mobile payment gateway uses grew up to 44.5%! 

These days, almost every app has an in-app payment feature. Why? Because customers sure appreciate the convenience of paying with just a click rather than logging into their bank accounts or typing in their credit card information.

But while most of us are familiar with how to pay through an app, not many probably know how they work on the technical side and what is needed to integrate them into an app.

Is that something you’ve been wondering about too? Then, you are in the right place – in this article, we will explore how and why to add a payment gateway for an app.

What is a mobile payment gateway?

Mobile payment gateways allow buyers to pay for purchases from the app and sellers to accept online payments. The gateway’s main function is to receive, process, encrypt, verify and transfer transaction data from the customer to the merchant. Basically, the payment gateway app acts as a bridge between the customers and the merchants to facilitate financial transactions.

Here’s how the whole payment process usually goes like:

1. A user chooses a product they want to purchase and adds it to their shopping cart.
2. At the checkout, the user picks which method of payment they want to use – credit card, bank app code, and so. Then, they are redirected to a gateway website, for example, Paypal (but there are plenty of others – we’ll mention those later on).
3. The gateway forwards the information added by the user to the bank.
4. The issuing bank checks the legitimacy of the purchase and makes sure the buyer has enough money in their account to cover the purchase.
5. If the verification is successful, payment confirmation is sent back via a payment gateway to the app.
6. The merchant then receives information that an order was placed and paid.
7. Finally, the gateway initiates a payment settlement, and the merchant sees the money in his account.

While it may seem like a long and tedious process, it only takes a few seconds for the transaction to go through – so is it any surprise that people are starting to turn away from using physical cash or banknotes? In the Asia-Pacific region, only 9% of people in 2019 used physical money, and the number is expected to go down even more by 2024 – to 1.6 %. 

In Poland meanwhile, the mobile payment industry is expected to reach US$ 26,893.9 million by 2025. That’s mainly thanks to the introduction of the BLIK service, which allows users to pay for their purchases and withdraw cash using only the user’s mobile banking app and a unique 6-digit code generated during each transaction. 

What are the benefits of using a mobile payment gateway?

If you own a mobile application or plan to create one, you surely know just how much competition is there on the market and how hard it is to keep people using your app. If you don’t keep up with the newest trends in the industry, then your app might be quickly replaced by another one. And mobile payments are one of such trends – mobile wallets are already by far the preferred payment method in the Asia-Pacific region, where they are projected to make up 47.9% of POS transactions in 2024.

What makes them so valuable, though? First of all, mobile transactions are incredibly convenient. Consumers don’t have to carry cash with them, and there’s no problem with looking for change – and they can pay even from a distance (for example, pay for a takeaway as they are leaving their office).

For businesses, that means:

• Improved customer satisfaction thanks to a much more convenient payment process and being able to purchase products and services 24/7.
• Increased retention rate and consumer loyalty as clients enjoy their shopping experience.
• Much more secure payments as the data passed between the gateway are encrypted and passed through fraud detection tools. Digital wallets also provide extra layers of biometric authentication such as fingerprint scans and/or facial recognition, assisting businesses in ensuring payments aren’t fraudulent. 
• An opportunity to grow your business beyond borders, as payment gateways allow people all over the world to buy the products or services.
• No need to manage declined transactions yourself, as they are automatically either approved or denied.

What should make you, as a business owner, interested in using payment gateways is that they also reduce the risk of fraud:

• The customer’s card information or bank number is encrypted while being transmitted to the payment gateway, and so only the customer and their issuing bank know the entire number.
• A payment gateway must be compliant with PCI DSS standards, which means it must follow specific security standards to guarantee the security of your customers’ card information.
• Card services provide an additional security protocol called 3-D Secure that requires the customer to use a one-time password for every card they use to make an online payment.

And as the last benefit, adding a mobile payment gateway to your new app can significantly boost your revenue as well. Statista report that by 2022, the transaction value of mobile payment apps will reach nearly $14 trillion – if you want to have your share out of that huge revenue, then implementing a mobile payment gateway is simply a must. 

Which payment gateway provider should you choose?

Before we’ll into how exactly you can implement a payment gateway into your app, let’s talk about which one you should even choose – because you have several options. Here, the best idea is to note down your needs and then compare 

the payment gateway providers to see which one would fit your business best.  

For example, if you want to accept payments in cryptocurrency, you should carefully check which providers give cryptocurrency as a supported payment option. Some providers also list business types that they don’t work with, such as gambling. 

Plus, before choosing the provider you should also compare:

• In how many countries does the provider work (and can it accept foreign currencies) 
• The number of features each provider can offers
• Transaction fees (especially the hidden fees)
• Available integrations
• Compliance with PSD2 and PCI DSS Policies
• Available customer support.

Now, what are the most well-known payment providers on the market?

1. Stripe

With Stripe, merchants can build branded payment pages, create custom transaction reports or invoices, and more using the built-in developer tools. A machine-learning fraud detection system is also available, along with 24/7 customer support. Stripe accepts all major payment methods and over 135 types of currencies, together with local payment methods.

Stripe charges a flat 2.9% for international cards (1.4% for the European area) + a $0.30 fee on online credit card transactions.

2. PayPal

PayPal offers two payment gateway options: Payflow Link and Payflow Pro. Both work with major credit cards, digital wallets, and e-commerce platforms. Paypal is available in 204 countries and accepts 102 currencies, so it might be useful if you plan to expand internationally. 

You’ll pay a transaction fee of $0.10 plus a commission of 2.90% for each transaction. Additionally, PayFlow Pro has a $25 monthly fee. However, there are various features included in the price, such as enhanced security and fully customized checkout.

3. Braintree

Despite not being as robust as other providers, Braintree can still integrate with a wide range of e-commerce platforms, invoicing software, analytics apps, and plugins. 

With Braintree, you can accept all major credit cards, digital wallets, ACH deposits, Venmo, and PayPal. You can also accept payments in more than 130 currencies. Additional features include recurring billing, a customer information manager, reporting tools, and APIs for developers. Braintree also offers data encryption, payment authentication, session management, and activity monitoring for all payments. 

Braintree charges 2.5% + $0.49 per transaction, plus 0.75% for ACH deposits.

4. Amazon Pay

If you already sell your products on Amazon, Amazon Pay may be a good payment gateway provider for you as with it, users can complete their transactions using just their Amazon credentials. It can also integrate with popular e-commerce platforms like Shopify, BigCommerce, or Magento- their supported payment options are limited to most popular credit cards only though. 

Amazon Pay does not charge a setup fee, but it takes a 2.9% + $0.30 cut on all domestic transactions. That number jumps to 3.9% for international transactions.

5. Skrill

Skrill offers significantly lower transaction fees than other payment gateways – for some payment methods, you won’t pay a fee at all, and for others, the fee is as low as 1%. The rates depend on the country though. What’s more, Skrill supports over 40 currencies and 100 payment methods – even cryptocurrency. Skrill can also process international payments at a rate of 1.9% per transaction.

Skrill gateway is compatible with over 20 of the most popular eCommerce shopping cart solutions, including WooCommerce, Magento, Shopify, PrestaShop, etc. To pay, users must have a Skrill account with a linked credit or debit card, though. 

How to add a mobile payment gateway to your iOS or Android app?

Now getting to the details – how exactly can you add a payment gateway to the apps? If you have already chosen your future gateway provider, then you should head to their main page and look for a page with implementation instructions. Each service provider has its own set of software development kits (SDKs) to use and often, also have detailed instructions on how you can add the integration. The general steps are the same for both Android and iOS apps: 

• Integrate Server-Side and Client-Side SDKs
• Connect to API
• Apply for a payment security certificate

This last stage is crucial as your server is directly involved in processing payment details and so must conform to PCI-DSS standards as well. To obtain this certificate, you must go through two steps. In this case, the first thing you need to do is evaluate all your information systems that hold card data and fix any problems found. After that, your organization will undergo an audit by one of the PCI Security Standards Council companies, after which your company will be certified, and you can begin accepting payments.

Another thing you should look at is making your app PSD2 compliant. PSD2 is focused on improving the security of all electronic payments while also making it easier for the customers to access their banking data – you can read more about it in our previous article.

As for the technical steps – below, you can find links to some of the payment gateway integration instructions, both for iOS and Android system apps.

How to add a payment gateway for Android

1. Stripe Integration SDK for Android
2. PayPal Integration SDK for Android
3. Braintree Integration SDK for Android
4.  Amazon integration SDK for Android

How to add a payment gateway for iOS

1. Stripe Integration SDK for iOS
2. PayPal Integration SDK for iOS
3. Braintree Integration SDK for iOS
4. Amazon Integration SDK for iOS.

As you can see, the instructions are pretty long and detailed – and require specific coding skills. If you are familiar with using SDK, know how to work with API, and also understand the compliance requirements, then you might try adding the payment gateways yourself. But that might both take far more time and effort than you would like – especially if you encounter some unexpected problems during development. 

If you aren’t confident enough in your skills or don’t have enough people on your team to handle the integration yourself (or simply want to ensure the payment will be 100% compliant with all financial regulations), it’s a better idea to hire a development agency to assist. Choosing an agency means you’ll have a partner who has experience adding payment gateways to various types of apps, as well as someone who knows exactly what can go wrong – and how to prevent it. But they can also help you create a smooth UI for your app, take care of the maintenance, and suggest how you could improve the safety of your mobile payment gateway.

Our in-house team of FinTech industry experts has a wealth of experience when it comes to developing financial software and currency exchange apps, as well as integrating payment gateways into mobile apps. By complying with regulatory requirements, such as CIS, NIST, and SOX, they can also ensure the safety of your app users’ documents and personal data.

A few of the projects we worked on involved adding a payment gateway:

• Pick24 
• Solver
• Sportech

Conclusion: 

Giving your app users an option to pay for a product or service anytime they like and at a click of a button is virtually a necessity now. But for that, you need a mobile payment gateway. But which one should you pick out of the plethora of providers? With so many options, it’s easy to get lost and end up implementing a gateway that doesn’t offer the features you need, or that has a number of hidden fees. 

That’s why we recommend getting professional advice on this matter from software development companies – both to save your time but also your money and nerves. Since Crustlab has been in the FinTech space for years, our developers can easily recommend a payment gateway provider that best fits your business – and then help you with the integration.