In the world of eCommerce, payment gateways play a crucial role in facilitating online transactions by securely processing customers' payments. Understanding how these gateways function is essential for businesses looking to operate smoothly in the digital marketplace. This article will introduce and compare several payment gateways for eCommerce on the market. As you read through, you’ll learn about their application procedures, fees as well as limitations.

What is an eCommerce payment gateway? 

An eCommerce payment gateway functions as a virtual bridge between a customer's purchase and the merchant's payment processor, similar to a digital point-of-sale terminal. It encrypts sensitive financial data, such as credit card details, provided by the customer during a transaction on an eCommerce website. This encrypted information is securely transmitted to the payment processor, which then sends back the transaction outcome to both the merchant and the customer in a matter of seconds, ensuring seamless and secure online payments. By integrating with various financial institutions, payment gateways enable businesses to accept multiple payment methods, from debit and credit cards to digital wallets. This integration not only enhances consumer trust but also provides an efficient mechanism for businesses to manage their online sales operations effectively.

How do eCommerce payment gateways work?

When a customer makes a purchase on an eCommerce website, the payment gateway performs several steps to ensure a successful transaction:

1. Initiation of payment: The payment process begins when a customer selects products or services on an eCommerce website and proceeds to the checkout page to complete the purchase. At this point, the customer is prompted to enter their payment details, including credit card information or alternative payment methods. 

2. Encryption and data transmission: Once the customer submits their payment information, the payment gateway encrypts this data to secure it from potential threats during transmission. Encryption protocols such as Secure Socket Layer (SSL) or Transport Layer Security (TLS) are commonly used to safeguard sensitive information.

3. Authorisation request: The encrypted payment data is then forwarded by the payment gateway to the acquiring bank or payment processor. The acquiring bank processes the authorisation request and verifies the transaction details, checking for available funds and ensuring that the transaction is legitimate.

4. Communication with issuing bank: After receiving the authorisation request, the acquiring bank communicates with the customer's issuing bank to obtain approval for the transaction. The issuing bank verifies the customer's account details, funds availability, and authenticity to authorise or decline the transaction.

5. Transaction approval: Upon receiving approval from the issuing bank, the acquiring bank informs the payment gateway, signalling that the transaction is authorised. The payment gateway then relays this information to the eCommerce website, indicating that the payment has been successful.

6. Settlement and funds transfer: Following transaction approval, the payment gateway facilitates the settlement process, where funds are transferred from the customer's account to the merchant's account. This transfer of funds typically occurs within a specified period, depending on the payment processing timeline.

7. Payment confirmation: Once the transaction is successfully processed, the customer and merchant receive confirmation of the payment. The customer receives an order confirmation, while the merchant acknowledges the successful payment and processes the order for fulfilment.

3 examples of Hong Kong businesses who use eCommerce payment gateways

Discover three compelling examples below showcasing the eCommerce payment integration in the bustling business landscape of Hong Kong.

Slowood achieved 36% increase in returning customers with local payment methods

Slowood, a sustainable lifestyle store in Hong Kong, has leveraged eCommerce payment gateways to promote eco-friendly living and responsible consumption. 

Through Airwallex’s payment solutions, Slowood offers customers local payment options seamlessly integrated into their online Shopify platform. Shoppers can choose from a variety of payment methods, including credit cards, digital wallets, FPS, Alipay HK, WeChat Pay and more, all processed securely through the integrated eCommerce payment gateway for a smooth shopping experience. Within 90 days of implementing Airwallex Payments on their eCommerce site, Slowood saw a 36% increase in returning customers and a 50% rise in shoppers using local payment methods.

Two More Glasses enjoys 30% increase in global business

Two More Glasses is a Hong Kong-based eCommerce platform that stands out for exceptional selection of wines sourced from vineyards around the world.  

By integrating Airwallex’s cloud-based financial solutions with the eCommerce platform Woo, the company facilitates customer payments from over 180 countries through 160+ methods like Visa, Mastercard, and PayPal. This integration allows customers to easily complete their purchases with preferred currencies and payment options, boosting global revenue by 30% due to the simplified, quicker, and more cost-effective international transactions. Airwallex also helps neutralise FX volatility with low-cost currency exchanges and transfers across major currencies, reducing FX erosion of product margins by up to 5% and cutting transfer fees by 25%, saving US$30,000 annually.

Grams(28) stimulates sales growth by offering BNPL

Grams(28) is a luxury eCommerce brand based in Hong Kong, known for its quality Italian leather goods that seamlessly blends functionality with aesthetics.  

Through Airwallex’s eCommerce payment gateway, Grams(28) offers a variety of payment options, including PayPal and major visa cards, ensuring a secure and streamlined shopping experience. The checkout process is designed to be quick and simple, minimising the risk of cart abandonment. 

Due to its premium pricing, impulse buying is rare among Grams(28)’s customers, which can prolong the sales cycle and business growth. With Airwallex’s Klarna plug-in, Grams(28) effortlessly integrates the Buy Now Pay Later (BNPL) option into its eCommerce platform, ready within a week of setup. This feature allows Grams(28) to accept payments in foreign currencies, and manage multi-currency sales through Airwallex’s all-in-one financial platform.  Since adopting the BNPL option with Klarna, 20% of sales now stem from this feature.

What are the different types of eCommerce payment gateways?

There are various types of payment gateways, each catering to different business needs. These categories include:

• Hosted payment gateways: Hosted payment gateways are external platforms that handle the payment process for merchants. They redirect customers to a secure page where they can enter their payment information, and once the transaction is completed, the customer is redirected back to the merchant's website. This type of gateway is suitable for small businesses or those with limited technical expertise as it requires minimal setup and maintenance.

• Self-hosted payment gateways: Self-hosted payment gateways allow merchants to have more control over the payment process by hosting it on their own servers. This option gives them more customisation options and eliminates the need for customers to be redirected to an external site. However, it also comes with increased responsibility for security and compliance.

• API-hosted payment gateways: API payment gateways allow merchants to integrate a payment system directly into their website or mobile application through an API (Application Programming Interface). This provides a seamless and secure payment experience for customers, as they never leave the merchant's site. However, it requires more technical expertise and maintenance on the merchant's end.

• Local bank integration: Local bank integrations use their local bank accounts for direct fund transfers. This feature is especially advantageous for businesses operating across multiple countries, providing a convenient solution for managing international payments. Such payment gateways connect directly to the bank's payment system, proving beneficial for businesses targeting customers in specific regions where the local bank is a trusted and familiar entity. 

Top 3 benefits of using an eCommerce payment gateway

eCommerce payment gateways play a pivotal role in facilitating secure online transactions for businesses of all sizes. Here are the top three benefits of using an eCommerce payment gateway:

1. Enhanced Security: eCommerce payment gateways offer a robust layer of security, safeguarding sensitive customer information during online transactions. By encrypting payment data and adhering to strict security protocols, these gateways help prevent fraud, identity theft, and unauthorised access to financial details. This heightened level of security instils trust among customers, encouraging them to make purchases online with confidence. Additionally, eCommerce payment gateways often comply with Payment Card Industry Data Security Standard (PCI DSS) requirements, ensuring that businesses meet industry standards for protecting payment information.

2. Global reach and diverse payment options: One of the key advantages of using eCommerce payment gateways is the ability to expand a business's reach beyond borders. These gateways support multiple currencies and payment methods, allowing businesses to cater to a diverse international customer base. By accepting major credit cards, digital wallets, bank transfers, and alternative payment methods like Alipay and WeChat Pay, businesses can tap into new markets and capitalise on global opportunities. This diversity in payment options not only enhances customer convenience but also increases the likelihood of completing transactions, leading to higher conversion rates and revenue growth.

3. Streamlined checkout process and improved customer experience: eCommerce payment gateways streamline the checkout process, making it quick and hassle-free for customers to complete their purchases. By offering a seamless and user-friendly payment experience, businesses can reduce cart abandonment rates and enhance overall customer satisfaction. Integrated with eCommerce platforms, these gateways provide a cohesive shopping experience by allowing customers to stay on the merchant's website throughout the payment process. Features like saved payment information and one-click checkout, and real-time transaction processing further contribute to a frictionless shopping experience, encouraging repeat business and fostering customer loyalty.

Top 3 considerations when choosing an eCommerce payment gateway

Using an eCommerce payment gateway provides numerous benefits, but there are also considerations for businesses when integrating these systems into their online operations. Here are the top three considerations of choosing an eCommerce payment gateway:

1. Transaction fees and costs: One of the primary considerations is the associated transaction fees and costs. These fees typically include a percentage of the transaction amount along with a fixed fee per transaction. These fees are necessary to cover the services provided by the payment gatewayAdditionally, some payment gateways may charge fees for currency conversion, chargebacks, or account maintenance.

2. Technical and integration complexity: Integrating an eCommerce payment gateway into an online platform can incur technical complexities for businesses, particularly those with limited technical expertise. Depending on the chosen gateway, businesses may need to navigate API documentation, ensure compatibility with their existing systems, and conduct thorough testing to ensure a seamless integration. Moreover, maintaining and updating the payment gateway to align with evolving security standards and compliance requirements may take time and resources. Technical issues such as downtime, latency, or errors in payment processing can also impact the customer experience and hinder business operations.

3. Processing time: Processing time depends on various factors such as network congestion, system downtime, or high transaction volumes. Delays in processing payments can frustrate customers, leading to abandoned carts and lost sales opportunities. Slow transaction speeds can also hinder the seamless flow of online transactions, affecting the overall user experience and potentially damaging the reputation of the business.

Top 5 features of an eCommerce payment gateway 

eCommerce payment gateways are essential tools for online businesses to securely process transactions. Here are the top five key features that distinguish a robust eCommerce payment gateway:

1. Security protocols: A top feature of any eCommerce payment gateway is robust security protocols that ensure the safe transmission of sensitive payment information. This includes encryption technologies that protect customer data during transactions, secure sockets layer (SSL) certificates for data encryption, and compliance with industry standards such as the Payment Card Industry Data Security Standard (PCI DSS). Advanced security features like tokenization, fraud detection mechanisms, and two-factor authentication add layers of protection against cyber threats and fraudulent activities, instilling trust in customers and merchants alike.

2. Multiple payment options: An effective eCommerce payment gateway offers a variety of payment options to cater to diverse customer preferences. This includes acceptance of major credit and debit cards like Visa, Mastercard, and American Express, as well as alternative payment methods such as digital wallets (e.g., PayPal, Apple Pay), bank transfers, and cryptocurrencies. By providing a range of payment choices, businesses can accommodate a broader customer base, improve checkout conversion rates, and enhance the overall shopping experience for users. Many people in Hong Kong use local online payment methods, such as AlipayHK, WeChat Pay and FPS, to pay online shops nowadays. They are usually redirected to the online payment platform’s mobile app to complete the transaction.

3. Mobile optimisation: In the era of mobile shopping, a key feature of a modern eCommerce payment gateway is mobile optimisation. This ensures that the payment process is seamless and user-friendly on mobile devices, with responsive design elements that adapt to various screen sizes and resolutions. Mobile-optimised payment gateways enable customers to make purchases conveniently on their smartphones and tablets, leading to higher conversion rates and improved user satisfaction.

4. Integration capabilities: Another critical feature of an eCommerce payment gateway is its integration capabilities with different eCommerce platforms, shopping carts, and other third-party applications. A versatile gateway should offer easy integration through APIs, plugins, and software development kits (SDKs) to streamline the setup process for merchants. Seamless integration allows businesses to synchronise payment data, manage transactions efficiently, and track analytics seamlessly across multiple systems.

5. Reporting and analytics: Lastly, a feature-rich eCommerce payment gateway provides comprehensive reporting and analytics tools that offer insights into transaction data, sales trends, customer behaviour, and revenue metrics. Detailed reports and customizable dashboards enable businesses to monitor performance, identify growth opportunities, and make informed decisions to optimise their payment processes. Real-time reporting capabilities help merchants track transaction status, detect anomalies, and reconcile payments accurately, fostering operational efficiency and informed business strategies.

3 examples of eCommerce payment gateway providers

Introduction and comparison of common online shop payment gateways

PayPal and Stripe are the most common online shop payment gateways globally. Trending eCommerce platforms, such as Shopify and SHOPLINE, which help small businesses build an online store, also launched their own payment gateways.

PayPal is one of the largest payment gateways worldwide. Online merchants can register for free to receive customer payments made with credit cards, debit cards as well as PayPal Credit. Customers are redirected to PayPal’s page from the online shop’s site to complete a transaction. Reputed as a time-honoured brand, PayPal is equipped with comprehensive security encryption technology but comes with higher handling fees than its counterparts at the same time.

Meanwhile, Stripe focuses on simplicity of use. Similar to PayPal, it offers free registration for online merchants. In addition to credit cards and debit cards, Stripe supports payments made with e-wallets, such as Apple Pay and WeChat Pay, making it suitable for online shops targeting the mainland market. By using Stripe, customers can complete the whole transaction directly on the shop’s site, which can benefit the shop’s conversion rate.

Airwallex is another player in the online payment gateway landscape, offering innovative solutions tailored for businesses engaged in global commerce. Airwallex stands out for its focus on international payments and cross-border transactions. Unlike traditional payment gateways, Airwallex provides businesses with the ability to manage multiple currencies seamlessly, enabling them to conduct transactions in various currencies with ease. This feature is particularly beneficial for businesses with a global customer base or those involved in cross-border trade.

Moreover, Airwallex offers competitive foreign exchange rates and lower transaction fees for international payments compared to many traditional financial institutions. This can result in cost savings for businesses conducting frequent cross-border transactions, enhancing their profitability and financial efficiency.

Below table* summarises the capabilities and pricing for the 3 payment gateways.

*Data updated as of January 2025. Refer to official websites for the latest information

**Payout in HKD only if your company is registered in HK.

Why choose Airwallex Checkout as your eCommerce payment gateway?

Airwallex Checkout is an all-in-one payment gateway that allows online shops to accept payments from customers across the globe with fast and flexible settlement in multiple currencies. 

Shop owners can get paid in over 130 currencies around the world and improve conversion by offering their customers more than 160 local payment methods, including credit cards, FPS, AlipayHK and WeChat Pay. “Buy now, pay later” payment platforms such as Klarna and Afterpay are also supported.

Through Airwallex’s like-for-like settlement, they can also eliminate costly foreign exchange conversion fees and maximise their profit by collecting and settling funds in the same currency.

Airwallex meets international security standards, including PCI DSS, SOC1, and SOC2 compliance. It is also regulated by the Customs and Excise Department and holds a Money Service Operators license (MSO License No. 16-09-01929).

Frequently asked questions

Which is the best eCommerce payment gateway?

Determining the best eCommerce payment gateway depends on factors like business needs, integration ease, security, and cost. Popular options include Airwallex, PayPal, and Stripe.

What are the top eCommerce payment gateways in Hong Kong?

In Hong Kong, top eCommerce payment gateways include Airwallex, PayPal, Stripe, offering diverse options for online transactions in the region.

Sources: 

Information on payment gateways was retrieved as of January 2024, from below sources. Information provided is for reference only. Please refer to the official websites for the most up-to-date details

1. https://stripe.com/zh-hk/pricing

2. https://www.shopify.com/hk-en/pricing

3. https://blog.shopline.hk/payment-gateway/

4. https://www.paypal.com/hk/webapps/mpp/merchant-fees

Disclaimer: The information was based on our own online research and we were not able to manually test each tool or provider. The information is provided for educational purposes only and a reader should consider the specific requirements of their business when evaluating providers. This research is reviewed every 6 months. If you would like to request an update, feel free to contact us at [email protected].