Magento

Everything You Need to Know About Magento 2 Payment Gateways

Knowing which Magento 2 Payment gateway to go with can be overwhelming. Learn about the features and benefits of each here.

Category

Magento

Published

July 18, 2023

Author

Jesse Peters
Head of Marketing @ Instant

If your online store is currently powered by Magento 2, then you’re one of over 200,000 sellers that value high-performance features and rich scalability options for your eCommerce solution.

Team high five!

Magento 2 is an open source eCommerce platform that provides flexibility for mid to enterprise sized online sellers, it’s used by some of Australia’s biggest brands and (if it already sounds too good to be true) it also  comes at an incredible competitive price tag.

If you haven’t cottoned on just yet, there is a catch…but it’s not a dealbreaker.

Magento 2 stores are bespoke, and putting together an online store using this solution often means that a professional developer is required to make updates ranging from the complexity of the set. This could mean you need a developer to move elements around on your product page to help you build out new pages and functionality all together.

Being so reliant on development and coding, Magento 2 has a limited list of payment gateway solutions and there isn’t a lot of information online either.

We’ve put this guide together to help remove the confusion from Magento 2 payment gateways and hopefully offer you some alternative solutions as well.

What we cover

  1. Who this article is for
  2. Payment terminology and the difference between payment gateway and processing
  3. How payments in Magento 2 work (it’s the best place to start for anyone new to Magento)
  4. Payment gateways that work with Magento 2
  5. Taking your Magento 2 payment experience to the next level

Who this article is for

If you’re considering setting up a Magento 2 store and are wondering about how its payment gateways work

If you’re currently using the default Braintree payment gateway and are looking to change to something that suits your needs better.

But first, let’s get our terminology in order

Before we begin, let’s be sure we’re on the right page about what the difference between a payment gateway, method and processor is. If you’re a hyper-intelligent being then please please skip ahead. For the rest of us mere mortals, here’s a quick refresher:

Term

Definition

Payment method

The method a customer uses to purchase something, including credit card, bank deposit, Afterpay, Apple Pay, Google Pay and more.

Payment gateway

Communicates the decline or approval of transactions between sellers and customers

Payment processor

Facilitates a transaction and ensures individual transaction details are transferred from the customers’ bank to the sellers bank.

So in payments terms, a customer will use a credit card as their payment method, the payment gateway will check to ensure the funds are available and either communicate the transaction is approved or declined and then the payment processor will facilitate the transfer of the transaction details between the merchants bank and the customers banks, and settle the payment.

How payments work in Magento 2

Magento is a powerful eCommerce platform, and has default features for anyone online seller looking to get started straight away.

Firstly, if offers five basic/default payment methods:

  • Check/money order
  • Bank transfer
  • Cash on delivery
  • Purchase order
  • Zero subtotal checkout

Anything beyond the above payment methods will require three third-party services, however, there is a stored credit card feature which is mainly used for testing. If you are planning on using a payment gateway on top of the default payment methods (which is highly recommended), then it’s best to use the features available from your third party gateway.

Ok, so now we have the basics out of the way, let’s look at the differences between the payment gateways that integrate with Magento 2 below.

What payment gateways work with Magento 2

The extensions available in the Adobe Commerce Marketplace are basically limitless. There are hundreds of thousands of both native and third-party extensions. In this section, we look at native Magento 2 suppliers, but feel free to research into the many third-party providers if you don’t choose one of the below.

Braintree

Braintree was acquired by PayPal in 2013 for a staggering $800m as the originally Chicago-based payment gateway was the leader in mobile payments at the time.

Braintree charges 1.75% + A$0.30 per transaction, including GST, and there are no existing customer reviews on the Marketplace listing. It seems that there are technical issues with this integration, but some developers have found a hack to fix the checkout errors in this blog post.

Klarna

Klarna is a Swedish payment provider that is mostly known as being one of the leaders suppliers in buy-now-pay-later services.

When it comes to fees, Klarna retains the right to charge the amount set out in individual agreements with sellers. The Klarna extension supports Magento 2.4.5 p1, however there are minor issues with the bulk creation of invoices.

Stripe

Stripe is a global financial services business that was originally founded in 2010. It is the go-to payment gateway for many new businesses, and boasts a lot of integrations with different payment providers and shopping carts.

Stripe charges 1.75% + A$0.30 for domestic cards and 2.9% + A$0.30 for international cards.

It’s easy to install on Magento 2, however, there are a few technical errors that occur before and during checkout. Checkout some of the main errors on the extension listing here.

Ayden

Ayden is an acquiring bank that helps businesses accept online and point of sale payments. It was founded in Amsterdam in 2005 and since has expanded its services to enable end-to-end payments, data and financial management.

Ayden has different prices for different countries and payment services but it charges A$0.18 for EFTPOS + additional charges.

The Ayden Magento 2 extension helps to facilitate international payments, however there are mixed reviews which you can check out here.

How to take your payment gateway in Magento 2 to the next level

So far, this article has been really technical and focused heavily on how to accept more payments through your Magento 2 store. If you’re using a platform like Magento, you may be limited to what third-party payment providers are available, but that doesn’t mean you should consider the customer experience during the checkout.

The cold hard truth is: payment options do directly impact cart conversions. Did you know that 59% of Australian shoppers prefer to checkout on their mobile compared to desktop? And did you know that 84% of customers are more likely to complete a purchase if 1-click checkout is offered?

So it’s fair to say that people want faster, seamless checkout experiences on small screens. Have you tried your checkout on your mobile? Have you tested every step to ensure it’s fully mobile optimised and can be done in as few steps as possible?

How Instant can help

Instant checkout integrates directly with Magento 2, and has been proven to increase checkout conversion rates by 40% as well as reduce checkout times from 2:40 to 0:30.

Instant is unique because it surfaces a 1-click checkout button on product pages, mini carts and on the checkout - meaning your checkout button takes up more real estate across your site.

Our seamless checkout experience offers:

  • An Instant purchase experience for your customers that can be accessed on products pages and the mini cart
  • An embeddable checkout button that looks and feels like your brand and website
  • A secure method for your customers to save their payment, billing and shipping information
  • A faster checkout experience for new and existing users

If these are features you want on your Magento store, then get in touch with our team for a tailored demo today.