Payment gateways vs. Ewallets. What to choose?

Payment gateways vs. Ewallets. What to choose?

It’s hard to imagine that many years ago you had to take cash with you to make purchases in stores. This method had more disadvantages than advantages.

Today, payments in cash have been successfully replaced by payments through an electronic wallet and using the most popular payment gateways. In this article, we’ll take a look at what payment gateways advantages allow them to remain popular, and we’ll also break down the main advantages and disadvantages of e-wallets.

E-wallets vs. payment gateways

When we compare one payment method to another, we often perceive them as complete opposites. This is certainly not the case with payment gateways and e-wallets. In this case, e-wallets can be a very good complement to payment gateways and vice versa.

Let’s examine their advantages and disadvantages right now.

Advantages of payment gateways and e-wallets

A payment gateway is a program that provides access to popular payment services. When placing an order, the customer chooses the payment method that suits him best. The list of such methods will depend on the provider of the gateway.

The task of the gateway is to exchange information between the seller and the buyer after the order has been placed. All gateways must meet high security standards, particularly the PSI DSS.

The benefits of using payment gateways include the following:

  • Less regulation.

When compared to the rules and requirements that are imposed on electronic wallets, in the case of payment gateways, everything turns out not to be so strict. Suffice it to say that companies offering e-wallets are required to obtain an e-money license. Payment gateways have no such need.

  • Higher security level.
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E-wallets require collecting a lot of data, unlike payment gateways. This leads to a much higher probability of data theft.

  • Less problems with development and further development.

The sheer number of features and the need to update them frequently means that integrating and developing e-wallets can be quite a challenge.

  • Minimal problems with vendor selection.

One payment gateway vendor will be enough to make it a success. In addition, updating the system will not take much time and effort, and you will be able to pay more attention to your customers.

Disadvantages of payment gateways

  • Refunds to the customer and low probability of further purchases.

When using a payment gateway, you return the money to the customer’s account or card, depending on how they paid. The money is not returned to the customer’s e-wallet and the likelihood that the customer will want to spend it in your company is much lower;

  • Transaction fees are much higher.

Transferring money is the only purpose of the gateway, which entails a high fixed commission or the need to pay a percentage of the transaction. E-money would save on commission by sending funds to your customers not to the source from which they made the payment, but to their e-wallets;

  • No extras.

With value-added services, companies often make good money, but in the case of payment gateways these services cannot be provided directly, unlike e-wallets. Examples of such services are gift cards, loyalty points, or free p2p payments.

Advantages of e-wallets

Why is the ewallet accept payments online option beneficial and convenient?

  • Wide functionality
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Whereas payment gateways act as intermediaries for a transaction and don’t provide much extra functionality, it’s the other way around with e-wallets. Using these wallets, you can receive loyalty points, gift certificates, various bonuses and more.

In addition, the developers of some e-wallets even create their own tokens, which are further distributed among users and can be exchanged for various gifts within the system.

  • Internal transactions are conducted without commission

When transferring money from one e-wallet to another, you do without intermediaries, such as banks, so you do not pay any commission for such an internal transfer.

  • Flexibility

With e-wallets you can transfer even micro amounts to other users, for example, 0.1 cent. But you’ll never do the same with payment gateways.

  • Convenient Refunds

When funds are refunded, they are sent to an e-wallet. This keeps the customer on the platform and gives them an extra incentive to spend their money there. Payment gateways typically send refunds to an account or card, and the customer can spend them anywhere.

However, e-wallets have some disadvantages. These disadvantages include:

  • The need to observe more stringent security measures;
  • The need to follow very strict rules and regulations.

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