What is a payment solution?

What is a payment solution?

With a payment solution, you can turn a simple website into a webshop – by making it possible for people to buy and pay for your goods and services online.

It should also be noted that different payment solutions accept different forms of payment – for example, Visa, Apple Pay or MobilePay – and you should choose your payment solution according to your needs and your customers' needs.

Payment provider

A payment provider is a technical platform enabling you to receive payments in your webshop.

Payments are often made via a payment window, most likely followed by an administration module where transactions are approved, cancelled, or refunded.

Often, the payment provider has nothing to do with the money involved in the transaction and is only responsible for passing on transaction information securely. However, some payment providers also offer card redemption, whereby they can manage the entire payment process.

Payment solution: payment gateway and card redeemer

To receive payments, you need a payment gateway and card redeemer. Some payment solutions offer both, and some only offer one or the other.

What is a payment gateway?

A payment gateway is a software tool that enables customers to pay for products and services in a webshop. A good payment gateway can handle multiple payment methods and multiple card redeemers.

Before choosing a payment gateway, consider the following:

1. If you have developed your webshop yourself, make sure the API documentation – the set of tools that allows different software components to interact – is of high quality.
2. You should also make sure the webshop solution you use supports a payment gateway.

What is a redeemer?

A redeemer is a financial company that is responsible for moving money between customer accounts and webshops. So, before you can receive payments from customers in your webshop, you need to have an agreement in place with a redeemer.

Redemption banks in Denmark are regulated by the Danish Financial Supervisory Authority.

The task of the redeemer is to authorise your webshop so it can receive authorised card payments. The redeemer is also responsible for transferring payments from a customer's account to your webshop's account.

The process looks like this:

1. When a customer enters their card details into the payment window, the data is encrypted before being forwarded by the payment provider to the card redeemer.
2. The redeemer checks the card's validity and whether there is enough money on it.
3. Once card validity and coverage have been approved, the payment provider receives confirmation.
4. The payment provider then approves the transaction in the payment window for the customer to see.
5. Once the webshop has approved the payment and begun the process of delivering the customer's purchase, the card redeemer withdraws the customer’s money.

This way, you will receive payment for the purchase after the agreement date.

What does a payment solution cost?

Payment solutions can differ in price and fees from provider to provider.

For example, you may have to pay a one-off sign-up fee, a monthly fee plus a percentage of each transaction, or a fixed amount per transaction.

In most cases, there are two payment solution models:

1. A payment solution that has a maximum number of transactions over a set time period (and which tends to be lower in price).
2. A payment solution that offers an unlimited number of transactions (and which tends to cost more to purchase).

The cost of the payment solution you choose will also depend on the type of business you run. For example, if you have a high-risk or large enterprise, it may make more sense for you to pay for a tailored package than a standard one.

On the other hand, if you have a small business and small budget, you may want to go for a payment solution that only accepts credit card payments and/or payments via apps such as MobilePay.

According to the Danish Consumer and Competition Authority, MobilePay  accounted for as much as 60% of all payments made to Danish webshops in 2021. Therefore, the cheapest payment solution may not end up giving you the best value for your money if it doesn’t include the option of MobilePay.

On a final note, it’s also always a good idea to contact the payment provider you want to go with so you can find out about fees and what payment methods they support before you make a decision.