Top 6 Facts About Payment Gateway Fees for E-commerce Stores

You may be making good earnings from your business, but as your business scales and transactions increase. Somewhere, you may be having a gut feeling that you are losing and not getting the revenue you expected. The intuition could be right somewhere and directing you to make a change. It may be about the gateway charges you are paying every time.

The payment gateway fees for e-commerce could eat into your revenue if not managed wisely. It requires your company to get into the system, continue the online payment gateway services, but with the right strategies, ones that align with your company’s goals, etc.

In this blog post, we will discuss all about payment gateway for e-commerce companies’ different fees, including Merchant Discount Rate (MDR), settlement charges, refund costs, and more.

Let us dig deeper and find out the answer you are looking for to make earnings with the right strategy and technologies.

What are the Payment Gateway Fees for E-commerce?

It is a fee that an e-commerce company pays to its payment gateway provider, like Wonderpay. Payment gateway fees for e-commerce are typically charged to initiate a transaction securely, either to accept or disburse payments for any purpose, including in-store and online stores.

The fee could range from 2% to 3%, as well as the fixed fees per transaction. It includes Merchant Discount Rate (MDR e-commerce) (for card processing), the setup fees, which potentially may include the maintenance charges, covering security, authorization, and your fund settlement between the entities, like banks.

The Role of MDR Fees for E-commerce Platforms

The MDR ecommerce is a fee that is distributed between payment processors, card networks, and banks that are involved in this entire ecosystem to facilitate digital transactions. This entire process is critical for securing payments, ensuring high success rates, managing the fraud risk, as well as enabling the instant settlement of customer funds into the merchant accounts.

Top Facts You Must Know About Payment Gateway Fees for E-commerce Stores

The payment gateway fee for e-commerce could directly affect your company’s revenue, and in some cases, other aspects also. Therefore, you need to work on this critical part strategically, but before you do that, you need to get into the system and get to know everything.

1. MDR Fees

First, you need to clear all fees and payment gateway charges for e-commerce. The merchant discount rate of each provider is different, which could be customized based on a company’s tokenization periodically.

You must be clear about all the charges that the online payment service provider will charge you. There are a number of charges, such as online store fees, the refund costs, transaction pricing, and the platform charges.

2. The Fee for Different Payment Methods

Do you know that payment gateways offer a number of payment methods? But each payment option charges you different fees. Here, we will discuss some of the significant payment methods that have different online transaction charges.

• Credit Cards: The credit card payment charges are usually higher due to risk and reward points.

• UPI: The Unified Payment Interface (UPI) charges are lower, and this makes it one of the best options and ideal for small businesses.

• International Payments: Not all payment gateways in India support cross border payments. If you run your business internationally, make sure your selected provider is good as an international payment gateway. Now, come to the charges for global payment gateways. The international transactions fee is different for every payment service provider and costs you a little more compared to the domestic transactions charges.

• BNPL and EMIs: The transaction fee for Buy Now Pay Later (BNPL) and Equated Monthly Installments (EMI) is another option that is attractive to your buyers and increases sales over time. But it could cost your company around 3.5% higher or lower, depending on the payment gateway service provider you choose.

3. Instant Payment Gateway Charges

In order to improve your business cash flow and smoothly run business operations, every small business depends on its working capital, right? This is typically generated from your earnings.

What if you need working capital? The online payment settlement happens after T+1 or T+2 days, as mandated by the Reserve Bank of India (RBI).

Would you go with instant payment settlement? But it is chargeable. In case you need instant settlement, it would be charged based on the transaction amount you are withdrawing. Therefore, you must be clear about it and ask your provider for all the charges it would require you to pay.

4. The Hidden Fees

Most payment gateways do not clearly disclose merchant fees for a transparent payment gateway for e-commerce or any merchants. It must be clear between you and your payment service provider for the clear gateway charges.

Here, we will discuss some of the significant charges that you should consider when choosing a gateway service provider.

• Setup Fees: Does your payment gateway for e-commerce charge any setup fees? If so, ask how much it will cost you, and what the other charges will be while integrating gateway solutions for your company. It will give you a clear understanding and prepare in advance, instead of shocking you in the end at the time of billing.

• Annual or Monthly Maintenance Fees: Will there be any yearly or monthly maintenance fees? It may cause you to give up part of your earnings, directly affecting your revenue. In case you are willing to pay the charges, be sure to know how much it will cost you. Once you are clear about the complete charges, you can plan in advance and pay the fee as needed.

• Refund and the Chargeback Fees: The charges for processing returns, as well as the disputed one which could be significant for you, and it may range from Rs 15 to 50 or sometimes more, that is counted per incident.

• Settlement Surcharges: There are T+1, T+2, as well as the same day settlement, also known as instant settlement, which can help you with instant payment settlement by charging you a small fee.

• PCI DSS Compliance Fees: The Payment Card Industry Data Security Standard (PCI DSS), which is usually maintained by a payment gateway, may be chargeable. If a gateway, maintain it, and ask if it will charge them.

5. Onboarding and KYC

At the time of onboarding, a payment gateway will ask for Know Your Customer (KYC) verification, which may cost you. If you are looking for a payment gateway for your e-commerce stores, ask the provider how much they will cost you, or if it will be processed through a third-party KYC service provider. These are small fees that a provider may not discuss with you, but you must be clear about all the charges. It will help you make an informed decision and choose the right payment gateway that aligns with your company’s exact requirements.

6. Platform Charges

The payment infrastructure provider may ask you for the platform charges. You must be clear about what their payment platform charges are. This will help you if there are any hidden charges that may cost the same.

Explore our complete payment gateway charges guide for businesses.

Why Choose Wonderpay as Your Payment Gateway?

The payment gateway for e-commerce stores, Wonderpay, delivers brands like yours with a rich experience by delivering a connected and complete solution. In order to meet your company’s exact requirements, you get a customized option for the price, as well as for business requirements.

WPay provides you with the flexibility to align with your company’s needs, such as having functionality like cashback to attract customers, EMI options, BNPL, multi-payment modes for alternative payments, and auto reporting & reconciliation that would be a productive tool for business use.

Final Thoughts

Payment gateway fees for e-commerce include various other charges, including MDR fees. There could also be hidden charges, which may directly affect your company’s revenue. However, at the time of selecting a payment gateway, you must pay attention to other factors also.

This may include the platform fees which gateways never tell you until you are, refund costs, transaction pricing, settlement charges, all these must be cleared to you in the first place before you finalize the provider for your business’s online payment needs.

Looking for a reliable and transparent payment gateway with fees for your e-commerce stores? Look no further, and connect with Wonderpay for your digital business transactions, where you get everything cleared, and the customization option to align with your company’s exact requirements.