Payment gateway fees explained: A complete comparison for businesses

A payment gateway is a tool that helps businesses accept customer payments online or in-store through payment methods such as credit and debit cards, and digital wallets like Apple Pay and Google Pay. 

When a customer makes a purchase, the payment gateway securely sends the payment details to the payment processor and communicates with the customer's bank to confirm the transaction and make sure there’s enough money. Once the transaction is authorised, the payment gateway informs the merchant and facilitates the transfer of funds, completing the purchase. This process ensures that transactions are fast, secure, and efficient for both merchants and customers. 

In this article, we'll cover the key components of payment gateway fees and how to choose the best provider for your business. We'll introduce Airwallex as a global payment gateway provider with transparent and competitive pricing, and compare our fees with other service providers like Stripe, PayPal, and Adyen.

What are payment gateway fees?

Payment gateway fees are the costs incurred by businesses to use a payment gateway service. They can be broken down into several components, including:

• Setup fees. Some payment gateways charge an initial setup fee, which is a one-time payment to cover the cost of integrating the gateway with the merchant's system.

• Monthly fees. These are recurring charges that merchants pay for accessing the payment gateway's services. Not all providers charge monthly fees, so it's important to compare options.

• Annual maintenance fees. Similar to monthly fees, these are recurring costs paid annually to cover costs like operations, software maintenance, and customer support.

• Per transaction fees. These fees help cover the costs for the gateway provider when processing your payment. Typically, transaction fees are charged using an Interchange++ (IC++) or blended pricing model. The main difference between the two is transparency, with IC++ giving you better visibility into the fee breakdown. The IC++ model breaks down the costs of a card transaction into three parts: interchange fee, card scheme fee, and processing fee – so you can see exactly what you're paying for. The blended pricing model, on the other hand, combines all three fees into a fixed percentage fee. 

Different payment gateway providers offer distinct fee structures. Some charge lower transaction fees but have higher monthly fees. This setup works well for larger businesses that handle a lot of transactions each month since the lower cost per transaction can lead to significant savings over time. Other payment gateways may come with no monthly fees but higher transaction costs. This pricing could be better for smaller businesses or startups with lower sales volumes or seasonal fluctuations. In these cases, not having monthly fees helps manage cash flow more easily, making the higher transaction fees a reasonable trade-off since there are fewer transactions.

Accept payments locally and globally using the Airwallex payment gateway

Airwallex is an end-to-end financial operations platform designed to help businesses scale globally. Our platform offers a payment gateway that enables businesses to effortlessly accept customer payments from 180+ countries, access multiple integration options to suit their specific needs, and gain comprehensive access to 160+ local payment methods.

Airwallex goes beyond being merely a payment gateway provider; we also function as a payment service provider. By supporting businesses in everything from payment acceptance to managing multiple currencies and payouts, we provide a one-stop solution for businesses aiming to streamline their global payment operations.

Some of our core features include:

• Global coverage. Airwallex accepts customer payments in 180+ currencies in 180+ countries, empowering businesses to expand their reach both locally and globally. We also support 160+ local payment methods, including bank transfers, digital wallets, and cards, so your customers can pay the way they prefer.

• Like-for-like settlement. As an end-to-end financial platform, Airwallex enables businesses to receive and hold funds in 11 currencies, including AUD, CAD, CHF, EUR, GBP, HKD, JPY, NZD, THB, SGD and USD. This means you won't have to convert your funds back to SGD every time an overseas customer pays you, helping you dodge unnecessary conversion fees. With our Global Accounts, you can accept, hold and pay out in the same currency, avoiding double conversion fees.

• Transparent pricing. Airwallex offers a straightforward pay-as-you-go fee structure with no setup and monthly fees, or hidden charges, ensuring you won't be caught off guard by unexpected costs.

• Payment Links. For businesses that want to skip the hassle of setting up a website, Airwallex offers Payment Links that allow you to easily create and send payment requests to your customers via email, SMS, messaging apps, or social media, making it easier for them to pay you. See how Wine Kin seamlessly collects payments from customers with different payment preferences using Airwallex's payment gateway and Payment Links.

How to choose the best payment gateway for your business

Choosing the right payment gateway or online payment service for your business is critical to ensuring smooth and secure transactions. Here are several factors to consider:

• Transaction fees. Transaction fees can significantly impact your operating costs. Carefully compare the fee structures of different providers, keeping in mind whether your business would benefit more from lower per-transaction fees or fewer monthly charges. Additionally, check if the provider offers bundled pricing for even greater savings. For example, see how Dreamcore has saved up to 5% by using multiple Airwallex services, including payment gateway, foreign exchange, and international transfers.

• Security features. Ensure that the payment gateway you choose has robust security measures in place to protect your business against fraudulent transactions. For example, Airwallex employs 3D Secure verification and two-factor authentication to ensure the legitimacy of each transaction.

• Integration options. Choose a payment gateway that seamlessly integrates with your existing systems, including eCommerce platforms like WooCommerce and Shopify, as well as accounting software such as Xero and QuickBooks. Many providers offer plugins or APIs for an easy integration process.

• Customer support. Reliable customer support can make a big difference in resolving issues such as chargebacks, disputes, and integration challenges quickly to maintain smooth business operations and customer satisfaction.

• Payment methods. Make sure the payment gateway can process the forms of payment that your customers prefer, whether that includes credit cards, debit cards, bank transfers, or other local payment methods. This ensures a seamless checkout experience for your customers and can increase conversion rates.

• Multi-currency support. If your business plans on selling internationally, choose a payment gateway that offers competitive multi-currency support and low fees for cross-border payments. Airwallex enables businesses to collect payments in 180+ currencies in 180+ countries. You can settle customer payments directly into your multi-currency Airwallex account and hold funds for your future payments in the same currency, effectively avoiding costly currency conversion fees.

Payment gateway fees comparison: Airwallex vs Stripe vs PayPal vs Adyen vs Shopify

Airwallex

Airwallex offers an end-to-end financial operations solution that brings together payment gateway services, international payments, foreign exchange, and multi-currency accounts in one platform to help businesses scale globally. With Airwallex, businesses can easily accept customer payments in 180+ currencies across 180+ countries and hold funds in their multi-currency account for future use. This allows businesses to efficiently manage international transactions without incurring costly conversion fees.

Moreover, Airwallex provides on-the-ground customer support in 60+ countries and the necessary licences to operate in these regions, helping businesses navigate the complexities of entering and succeeding in new markets.

Airwallex does not charge any setup or monthly fees. For businesses using our payment gateway services, we have partnered with 160+ local payment methods to help you save on international transaction fees, with rates starting from 0.7%.

Stripe

Stripe payment in Singapore offers a global payment gateway for businesses of all sizes, supporting over 100 payment methods for accepting both online and in-person transactions. The platform uses a pay-as-you-go pricing, starting from 2.2% plus SGD 0.35 per transaction for local payment methods and 3.9% plus SGD 0.5 per transaction for international card payments, with no setup fees or monthly fees.

Paypal

While Paypal is more commonly known for its personal accounts, it also offers global businesses a payment gateway solution that is flexible and easy to use. Besides payment acceptance, the platform facilitates easier invoicing, simplified payouts, and cashflow management. This makes it a great choice for a variety of businesses. In terms of pricing, PayPal transaction fee for both domestic and international card payment is 3.4-5.4% plus a fixed fee. It will be an extra 2.5-3.5% if currency conversion is required.​​

Adyen

Adyen offers an unified cross-channel payment gateway solution that allows enterprise companies to accept payments through various channels all on one platform. Their services include a payment gateway for web and in-app transactions, as well as point-of-sale systems for in-person payments. By using an unified platform, businesses can connect their online and offline payment data and gain deeper insights into customer behaviour.

For each transaction, Adyen charges a fixed processing fee of SGD 0.13 plus a fee that varies by payment method. While this combination may offer potential cost savings, the variability of the fees can make it challenging to accurately forecast the total cost of the payment gateway. 

To help businesses save on currency conversion fees, Adyen offers local payouts in HKD, SGD, and USD, which allows businesses to hold these currencies in their account and use them to pay their suppliers. Airwallex also offers like-for-like settlement for 11 currencies – read more about the  comparison between Adyen vs Airwallex in our article.

Shopify

Shopify is a popular eCommerce platform that offers its own payment gateway service called Shopify Payments. This integrated solution allows businesses to accept payments directly through their online store without having to set up a third-party payment gateway.

Unlike other payment gateways, Shopify charges a monthly fee for its eCommerce platform services, along with a transaction fee of 3.2% + SGD 0.5 for domestic transactions and 3.6% + SGD 0.5 for international transactions. 

Furthermore, Shopify lacks like-for-like settlement options, which means businesses may face currency conversion fees when processing transactions in different currencies. The platform also provides a limited selection of local payment methods, which may affect businesses operating in markets with specific payment preferences.

How to avoid payment gateway charges?

One way to cut down on payment gateway fees is to choose a provider that doesn’t charge setup or maintenance fees. If your business sells internationally or deals with suppliers overseas, using a global payment gateway that offers like-for-like settlement can lower your international transactions fees. Using Airwallex, you can:

• Accept customer payments in 11+ currencies including AUD, EUR, GBP, HKD, JPY, USD and more. Hold these funds in your multi-currency account without having to convert them back to SGD, saving on currency conversion fees

• Directly use the funds in your multi-currency account to pay your overseas suppliers, avoiding unnecessary currency conversion fees once again

Negotiating fees with payment providers is another effective way to manage your business expenses. If your business demonstrates significant volume, you may be able to negotiate discounts on transaction rates, reduced service charges, or even preferred partner rates.

Encouraging customers to use more affordable payment methods can also lower your transaction fees. Offer incentives such as small discounts or loyalty points for choosing lower-cost options like bank transfers, local wallets, or ACH payments. These methods often have lower fees compared to credit card transactions, which can add up over time.

Conclusion

Payment gateways are an essential part of any modern business, and it is crucial to choose the right one that fits your needs. With our global reach, extensive local payment options, and multi-currency account capabilities, Airwallex provides a cost-effective solution for globally-facing businesses looking to reduce their payment gateway fees.

Frequently asked questions

1. Are there any ways to negotiate lower payment gateway fees with providers?

Yes. Some service providers are open to flexibility, offering discounts or reduced rates for businesses that process a large volume of transactions. Reach out to your provider to inquire about customised pricing that suits your unique business needs.

2. How do payment gateway fees differ for domestic versus international transactions?

Payment gateway fees can vary between domestic and international transactions due to several factors. For domestic transactions, fees are generally lower as there are lower transaction costs and no currency conversion costs. On the other hand, international transactions typically incur higher fees. Choosing a global payment gateway like Airwallex can help mitigate these higher costs by enabling local payment methods and competitive FX rates.

3. What factors influence payment gateway fees the most?

The payment gateway provider you choose can significantly influence the fees you pay. For instance, Airwallex does not charge any setup or monthly fees and offers a transparent pay-as-you-go pricing model. We support global payment acceptance in 160+ local payment methods to help you save on international card payment fees and currency conversion costs.

4. Can switching payment gateways help reduce transaction fees?

Yes, switching to a payment gateway that offers like-for-like settlement can help reduce your transaction fees. Airwallex allows you to settle funds in the same currency your customers pay you in, avoiding unnecessary FX conversions. When you receive customer payments in foreign currencies, you can also hold them in your account without converting them back to SGD. You can later use these funds to pay your overseas suppliers or employees to further saving on FX fees. 

5. How do refunds and chargebacks affect payment gateway fees?

Payment gateways may impose a chargeback fee when a customer disputes a transaction and requests a refund. This fee covers the administrative cost the payment gateway incurs to handle the reversal of funds. Frequent chargebacks can lead to more expensive payment gateway fees, therefore it's important to implement strong security measures, such as 3D Secure or two-factor authentication, to reduce fraudulent transactions, which are common causes of chargebacks.

Sources and references

1. https://stripe.com/en-sg/pricing

2. https://www.paypal.com/sg/webapps/mpp/merchant-fees

3. https://www.adyen.com/pricing

4. https://www.shopify.com/sg/pricing

5. https://stripe.com/en-sg/pricing/local-payment-methods

6. https://support.stripe.com/questions/receiving-usd-payouts-for-singapore-and-hong-kong-users

7. https://docs.adyen.com/account/supported-currencies/

8. https://help.shopify.com/en/manual/payments/shopify-payments/store-currency/supported-payout-currencies