You’ve built your website, polished your product catalog, and finalized pricing. Now you’re ready for the final step before launch: enabling checkout.
A payment system takes your website from a static digital brochure to a working online store by letting customers pay securely. Here’s how to set up online payments on your ecommerce website.
What is a payment gateway?
A payment gateway is a secure payment portal on your website that allows you to accept credit card payments, debit card payments, and other forms of electronic payments. You can think of it as the doorway between your checkout page and the financial networks that approve or decline a payment.
Whether a customer enters their credit card info, chooses a digital wallet like Google Pay or Apple Pay, or initiates a bank transfer, the payment gateway encrypts that sensitive information and passes it along to the payment processor. The processor checks with the customer’s bank or card network to confirm funds are available. If approved, the money moves into a merchant account (a temporary holding account) before being paid out to your business bank account.
Customers expect flexibility at checkout, and the right mix of payment methods can reduce cart abandonment and increase sales. Payment gateways that comply with the Payment Card Industry Data Security Standard (PCI DSS) protect both you and your customers from breaches while building essential trust.
Types of payment methods for ecommerce websites
You can connect your online store with standalone providers like Stripe, PayPal, or Square, or use the built-in online payment system that comes with your ecommerce platform. Shopify, for example, supports more than 100 payment gateways, including its own Shopify Payments. However you choose to accept online payments, each method has its pros and cons:
Credit cards
Credit and debit cards are the most common ways customers pay online and the baseline option for nearly every ecommerce store. Offering credit card payments helps capture more sales, and most major payment gateways include fraud detection and chargeback protection features.
The trade-off is transaction fees. Card networks and processors typically charge a percentage of the sale (typically 1.5% to 3.5%) plus a flat processing fee. Rates vary by provider and card type, but even small percentages add up over time. Factor these fees into your budget calculations and pricing, along with any monthly fees your provider may charge. Cards also carry the risk of chargebacks, when customers dispute transactions and you have to return the funds.
Digital wallets
Digital wallets like Apple Pay and Google Pay let customers store their payment credentials for quick checkout. Especially on mobile, they reduce friction by replacing manual entry of credit card details with facial or touch recognition or a passcode.
But digital wallets shouldn’t be your only option. Adoption levels vary by demographic and geography. Some customers may lack phones with the necessary specifications, and spotty mobile coverage in rural areas can also limit adoption. This payment method is also dependent on Apple or Google’s infrastructure. For these reasons, digital wallets work best as a complement to credit card payments.
Buy now, pay later
Buy now, pay later (BNPL) programs like Shopify’s Shop Pay Installments, Klarna, Affirm, FlexShopper, and even PayPal are surging in popularity. These mostly interest-free loans let customers break large purchases into smaller installments, which often lead to bigger cart sizes and more completed checkouts.
On the downside, BNPL providers often charge higher transaction fees than credit cards—around 6% plus 30¢ per purchase with Affirm or Klarna, for example. A business owner of a small ecommerce store may want to build stronger margins before implementing BNPL because of the high fees.
Bank transfers
Some customers may prefer to pay directly from their bank account to your merchant account via bank transfers and ACH payments. In the US, this happens through the Automated Clearing House (ACH) network.
Fees for these transactions are often less than credit card processing fees, although payments can take longer to clear. Customers must also enter their bank details, which can add friction at checkout. ACH is often used for business-to-business (B2B) payments.
Cryptocurrency
Cryptocurrency is a niche payment option, but it can be valuable for certain audiences, such as those who buy digital art. Crypto payments transfer digital assets like Bitcoin or Ethereum directly between wallets, enabling fast settlement and easy global transactions.
However, blockchain transactions are irreversible, prices are volatile, and adoption is limited. Your target audience will determine whether crypto is an option you offer, but it’s usually best treated as an add-on rather than a core feature.
Some payment providers, including Shopify Payments, support cryptocurrency and other forms of electronic money.
What to consider before setting up online payments
- Customer preferences
- Fees and costs
- Security and compliance
- Technical ease of use
- All-in-one provider
Choosing a payment provider shapes both your profit margins and your customers’ experience. Here are some key factors to weigh before deciding:
Customer preferences
Once you’ve established basic payment options such as credit cards and digital wallets, look at your customer base. Younger audiences tend to prefer BNPL, while international buyers may expect regional systems like AliPay in China or Klarna in Europe. Check with your ecommerce service provider for insight into what is most popular among similar sites, or what your site analytics can tell you about your customers’ preferences.
Fees and costs
While you can’t avoid fees or other costs altogether, you can be prepared for what your payment processor charges. Consider building these fees into your pricing structure so they don’t erode your margins. If you’re running lean, consider delaying high-fee payment options such as BNPL until your budget isn’t as tight. Also, research any hidden costs, like monthly and setup fees.
Security and compliance
Make sure your payment processing provider protects customers’ sensitive financial data with strong data encryption and fraud protection. Payment gateways that support regulatory compliance standards (such as PCI DSS) can help reduce the risk of data breaches, and a secure checkout sends solid trust signals to your audience.
Technical ease of use
To keep things as simple as possible for your business, choose an online payment provider that is easy to set up and use. Most major ecommerce platforms offer pre-integrated options.
All-in-one provider
Some companies offer an all-in-one payment gateway service that bundles the merchant account (where funds are held), payment gateway (the secure portal for customer transactions), and the payment processor (the system that moves funds between banks). This can simplify setup and payment procedures, like refunds. Having all your payment data in one place can also help when you need insight into your consumer data. Just weigh this against potentially higher fees and having a single point of entry for malicious actors.
How to set up a payment gateway for your Shopify website
If you’re running your online store with Shopify, Shopify Payments is the way you’ll accept payments. Shopify Payments bundles your merchant account and payment processor so you won’t need a different contract or provider for each. Here’s how to set it up:
1. Check eligibility
Confirm you’re in a country that is eligible for Shopify Payments, and verify you have a valid business bank account in that country. Enable two-step authentication on your Shopify admin login, since it’s required for using Shopify Payments. Depending on your location, you may need to use your webcam or phone to upload a selfie or photo ID to prove your identity.
2. Access payment settings
Head to Settings > Payments in your Shopify dashboard and select Shopify Payments from the list of payment providers. Enter your business details, such as tax ID and bank account, and Shopify will create a merchant account to hold payments from customers before transferring them to your main bank account.
3. Enable alternative payment methods
Once your merchant account is verified, select which payment methods to support. You can also choose to support multiple currencies or region-specific payment methods during this step.
4. Run a test
Shopify has a test mode that you can activate in the same Settings > Payments section. Click Manage, then click the toggle button to enable Test mode. Remember to hit the Save button at the top of the page to activate.
You can enter test card numbers from Shopify’s site to see what it looks like when a transaction goes through versus what it looks like when a transaction fails. This is a good time to see if the confirmation email system works, which you can set up in Notifications via your Shopify admin page.
How to set up payment on website FAQ
How does payment work on websites?
When customers enter details on the checkout page or payment portal, the information is encrypted and sent to a payment processor, which verifies the data with the relevant financial institutions. Once approved, funds move to a merchant account after the payment gateway provider collects the transaction and processing fees. The remaining balance then transfers to the seller’s bank account.
How do I set up payments on Shopify?
Go to your Shopify admin page and click on Settings, then Payments. Select Shopify Payments (if it’s offered in your country), and enter all your business details: tax information, bank account, etc. Then you can enable credit and debit cards and digital wallets, among other payment options, as well as multiple currencies if you’re selling internationally.
How many payment options should I offer?
Having several payment options for customers to choose from can help your online business succeed. Credit and debit cards are an obvious, ubiquitous choice, followed by digital wallets. Buy now, pay later and recurring payment options can also make higher-end purchases easier for customers. The key is providing enough variety without overwhelming your customers with choice.
