What is an Online Payment Gateway?
An online payment gateway is the online platform that allows your e-commerce business to accept payments through your business’s website or app. The gateway acts as a secure intermediary between the you and the customer. Common online payment gateways in Asia include WeChat Pay, AliPay, PayPal, and Stripe.
We won’t go into detail about how the technology works. Instead, we will discuss the factors to consider when deciding which online payment gateway to use for your website, and compare the most popular choices to see which one suits the needs of your business.
Why choosing the right payment gateway is vital:
Choosing the right online payment gateway for your Hong Kong e-commerce business is crucial in making sure your business thrives. The payment process directly impacts the customer experience. It can be the difference between a repeat customer with an extremely high life-time-value or an abandoned cart.
A well-integrated and secure online payment gateway provides a seamless user-friendly checkout process and an overall positive customer experience, increasing customer satisfaction and reducing the chances of cart abandonment.
The choice of payment gateway will also affects your business’s credibility and trustworthiness. Customers expect their payment information to be handled securely, and a reputable payment gateway with robust security measures helps establish trust and safeguards sensitive data. Studies have shown that when a customer sees a payment method they are unfamiliar with, the rate of cart abandonment increases significantly.
The features, transaction fees, and compatibility with different currencies and payment methods can vary between different online payment gateways. Selecting a gateway that aligns with your brand and target audience show the customer a consistency in their user experience.
Finally, the choice between online payment gateways should consider factors like how well it integrates with your e-commerce platform, accounting software, and ERP sales software. Choosing the right online payment gateway early into the journey is vital for positioning your e-commerce business for scalable growth.
What Factors Should You Consider When Choosing an Online Payment Gateway in Hong Kong?
Who are you current and future customers?
Who and where your customers are located will be a major factor behind which online payment gateway you should choose. If most of your customers are in China, then it makes the most sense to choose a prominent Chinese platform like WeChat Pay or Alipay.
You should also consider who and where your future customers are located. If your business plans include expansions into certain regions, then, you should consider if the platform you are choosing operates in those countries and regions.
User Experience, Mobile optimisation, and Brand Recognition
User experience plays a significant role in establishing trust and credibility with your customers. When customers see a payment gateway they recognise or have used before, you have borrowed the goodwill of the payment gateway’s brand and established confidence with your customer. Seeing a familiar interface will also make your customers feel safe about data breaches or fraudulent activities.
Mobile optimisation is a priority for all payment gateways, but some platforms do it better than others. Studies have shown that the percentage of e-commerce purchases made through mobile have increased double digits each year. Unless your product is in a niche where people usually purchase on a desktop, such as desktop SAAS software, then you need to choose a payment gateway that has great mobile user experience.
Integration with your operations
This is one of the most important factors and many people often overlook the importance of how well the payment gateway integrates with your current operations, like your order and inventory management, the sales data analytics, and your accounting system. While the business is still small, reconciling these systems may only take a few hours each month, however, if your goal is to scale the business, smooth integration with your backend is vital.
The various fees involved in setting up and maintaining the payment gateway should be considered. The common fees most payment gateway platforms will have are:
Initial setup fees – Some platforms will charge a setup fee, but most will make the initial setup process free to attract more businesses onto their platforms.
Transaction fees – Different platforms will charge different rates for transaction fees, but it is usually based on a combination of a percentage of the transaction amount combined with a flat rate fee. For example, 2% of the sale plus HK$1.50 per transaction. The fees for a platform may also differ from region to region.
Monthly minimum fees – These are monthly fees that the platform will charge the business, but many platforms will waive this fee if a minimum dollar amount of transactions processed has been reached.
Chargebacks – These are when a customer disputes a transaction or refunds the sale. Some platforms will take a fee for chargebacks.
Currency exchange fees – These are the exchange fees to change the currency of the sale to the currency your business uses.
API access fees – Some platforms will charge a fee for your website or ERP to access their API so that you can integrate the platform into your website or backend.
Most Used Payment Gateway Platforms in Hong Kong
PayPal is available worldwide and in almost all currencies. They offer top of the line security, and allows customers topay with debit cards, credit cards, and PayPal transfers. PayPal is straightforward and easy to integrate into your website. The transaction fees are charged at 3.9% plus a flat rate of HK$2.34 per sale.
However, the PayPal user experience and interface is not as sleek as some of the newer platforms. The customer service for PayPal is also not based locally, making the service and support slow and unresponsive.
Alipay is the PayPal of Hong Kong and Mainland China. It has very similar feature offerings and even has a similar user interface. AliPay does not have the same brand recognition as PayPal, since Alipay is not nearly as well-known beyond the Asia Pacific region.
Alipay allows customers to pay with debit cards, credit cards, and the Alipay e-wallet transfers. Alipay charges a reasonable 2.5% transaction fee.
Alipay has a local customer service team, which is accessible and quick to respond.
WeChat Pay is by far the most popular online payment gateway platform in Mainland China. As of 2023, WeChat has over 800 million users in China. That’s a lot.
Because of their dominance, WeChat Pay does not offer as many different payment options to customers, but mainly relies on using just the WeChat wallet, which is directly linked to the users’ Chinese bank account.
Since WeChat Pay has cut out other payment options like credit card, they offer the lowest transaction fees starting as low as 1%.
PayDollar is the only payment gateway we have included in this list that is local and based in Hong Kong. This has both its advantages and disadvantages. PayDollar allows customers to pay with credit cards and debit cards.
As PayDollar is based in Hong Kong, their customer service and support team is extremely helpful. Although PayDollar does process Mainland China payments, as of 2023, their presence beyond Hong Kong is minimal.
PayDollar does have an intial setup fee, and their transaction fees start from 2.8% plus HK$0.60 but can get as high as 4.4% plus HK1.50 per transaction.
If your customer base is international, Stripe is a great choice. It has many of the advantages, such as, top of the line security and brand recognition like PayPal, but offers a more developer-friendly solution.
Stripe has gained considerable market-share in Asia. It offers a highly customizable backend and has by far the most robust data analytics support. However, the API and add-ons are not free.
Stripe charges transaction fees at 3.4% and HK$2.35 per transaction.
Although Shopify is not a payment gateway, we decided to include them because Shopify has its own built-in payment processing system, Shopify Pay. For an e-commerce business still considering which payment gateway to use, a great option might be to simply use Shopify as its e-commerce platform to streamline the entire sales process.
Shopify Pay supports credit card, debit card, and even PayPal as payment methods. Shopify charges 3.3% plus HK$2.35 per transaction.
Choosing the right payment gateway platform ultimately comes down to the needs of your customer base and the needs of your business.
For a business local to Hong Kong, our top choice is AliPay. AliPay is a great balance between choice of payment methods, good customer service support, brand recognition, and reasonable transaction fees. Using AliPay will also allow your business to scale and expand to Mainland China without the need to switching payment gateway platforms.
For businesses with a focus on Mainland China, WeChat Pay is the obvious choice. Using WeChat Pay gives you access to 800 million consumers. In fact, if a business does not offer WeChat Pay as a payment method, Chinese consumers may look for an alternative vendor that does.
For businesses with an international customer base, our top choice is Stripe. PayPal was a close second choice, but Stripe offers better customisability and integration with the rest of your business operations, and can provide incredible up to date insights and analytics for your business to make better informed decisions.
As your business scales and the customer base grows, you should be adding payment methods to create the best user experience.