Best Mobile App Payment Gateway: How to Choose the Best Provider

The world is going digital. Mobile apps and the so-called m-commerce are taking over the world. Statista estimated that worldwide in-app purchases reached $149.9bn in 2022. This year, m-commerce is projected to amount to almost half - 43.4% - of total retail sales, according to eMarketer.

Every business today needs an app, be it an online store, a taxi service provider or a grocery delivery. Otherwise, they’ll lose potential revenues as modern consumers love using their mobiles.

Yet, to leverage this behavioural trend, companies need to ensure smooth payment processing within their mobile applications. Here, we discuss how to choose the best payment gateway for mobile apps to meet your business needs and impress your clients.

What is a Payment Gateway for Mobile Apps?

A payment gateway is an essential techn­ology in the payments industry. It allows busin­esses to accept and process transactions. A payment gateway serves as a middl­eman, securely transm­itting payment details between the customer, merchant, payment processor and financial institutions. Think of a card machine in offline retail - a mobile app payment gateway does precisely that, yet within the mobile application.

How Does a Payment Gateway Work in a Mobile App?

A payment gateway handles customers’ payment data in securely encrypted form and passes it to the payment processor. The process usually takes a few seconds.

First, the customer initiates the checkout and enters their payment details within the app. The payment gateway then securely transmits encrypted data to the payment processor, which validates the transaction and communicates with the acquiring bank.

After a back-and-forth between the acquiring bank, card network and the issuing bank, the transaction is either approved or denied, depending on the funds available in the client’s bank account.

Payment Gateway vs Payment Processor

Payment gate­ways are often confused with payment processors. Yet they play separate roles in the transaction flow. A payme­nt gateway transmits the customer's payme­nt information from the merchant to the proce­ssor, acting like a digital cashier that ensure­s the safe exchange of data between the customer, merchant, and bank.

On the other hand, a payment processor is responsible for facilitating communication between the merchant, issuing bank, and acquiring bank. Its role includes ve­rifying and approving transactions while also facilitating funds transfer. Essentially, it acts as a me­diator that communicates transaction details throughout the process.

What to Consider Before Integrating a Payment Gateway for Mobile Application

When starting your search you may get overwhelmed at first, as the market is saturated with a wide range of options. Below are some factors to consider when selecting a payment gateway for mobile apps.

Individual Business Needs

When choosing the right provider, the most important factor is the intricacies of your business. Would your mobile app require some sort-of integration upon payment (for example, integration with social media)? Is the service you’re providing subscription-based? In this case, you’d need to ensure recurring payments are available. The features you’d need in your payment gateway would depend directly on your business needs.

You also need to decide on the level of DYI work you’re willing to put in. Some payment gateways providers offer a package of services: from setting up a merchant account, to processing payments, and mobile app payment gateway integration.

Demographics

Another factor to consider is the demographics among your clients. Who are they and where are they from? What are their preferred payment methods? For example, if your clientele is global, you’d need a mobile application payment gateway that can serve worldwide. The majority of people today pay using digital wallets (such as PayPal, ApplePay, GooglePay), credit and debit cards, according to Statista. Make sure your provider integrates these payment methods.

Security

Security is of utmost importance in the payments industry. The payment gateway you choose will transmit your clients’ payment details. Your task is to ensure they handle the data securely. The industry requirement is the Payment Card Industry Data Security Standard (PCI DSS), a set of protocols intended to ensure that all companies that process, store, or transmit credit card information maintain a secure environment. Always choose a provider that complies with PCI DSS.

Pricing

Your budget is another factor that will help you choose the right payment gateway. Watch out for the payment structure, transparency in transaction fees, setup and cancellation charges, chargeback fees and monthly fees. It is crucial to thoroughly evaluate­ and compare these fe­es to identify the­ provider that offers the most e­conomical and transparent solution.

Simplicity

Impleme­nting a user-friendly and intuitive payme­nt gateway can greatly enhance the user experience (UX) for your clients. This will result in less cart abandonment. Request detailed information about the payment gateway provider’s services and their payment process explained step-by-step.

How to Choose & Integrate a Payment Gateway for Mobile Apps

1. Define your Business Needs & Budget

Determine your desired features in a payment gateway, whether you require recurring payment or integration. You should also decide your budget at this stage.

2. Research Different Providers

Compare different mobile app payment gateway providers, paying attention to the various features they offer as well as customer reviews and testimonials. Filter down to only DCC-compliant providers.

3. Review Fees & Pricing

Evaluate the fee structure and pricing of the providers, making sure they fit into your budget. Look out for hidden fees. The best payment gateway providers will demonstrate transparency in their pricing.

4. Trial the service

When you have finalised a list of the top payment gateway providers that meet your business needs, test their services. Most payment companies will offer you a trial period without the payment commitment.

Payment Gateway with Noda

Elevate your business with Noda’s open banking and payment platform. Drive increased sales and save valuable time through streamlined processes. Our all-in-one platform prioritises customer understanding, efficient operations, and growth.

Noda is a worldwide payment and open banking provider for seamless business transactions. Our platform uses cutting-edge AI and machine-learning technologies. Unlock your business potential with Noda - your payments are our priority.