Many e-commerce websites that handle payment using a third party payment gateway end up paying a significant percentage of their gross transaction amount to the payment gateways. While there is a wide range of payment gateways available the fees still range from 0.1%  to 5% of the sales amount. Some gateways charge low per transaction fee percentage while requiring a monthly fee or monthly minimum amount in monthly transactions. Others that do not charge such a fee, simply offer their services at a higher % of fee. This is a huge amount of money for high sales volume sites.

Another aspect that worries the e-commerce sites is that users are many a times redirected to the payment gateway sites to fulfill the payment.  Many of the users who checkout and are redirected to the gateway do not complete the transaction nor return to the merchant site.

The solution to these situations is to accept payments on your own site and not using a third party payment gateway. While this option is to many the most lucrative to operate its certainly the most difficult one. Usually with a third party payment gateway, you only need to sign up, verify your account and follow a few simple steps to start accepting payments online. However when not using a third party gateway you have to comply with something they call as “Payment Card Industry Data Security Standard” or in short and more commonly PCI DSS. You can find more information about PCI DSS standard, compliance measures, frequently asked questions on the PCI DSS website.

So it’s easy right? Well not so easy as it seems. According to Gartner, PCI compliance will cost up to an average of $2.7 million among Level 1 merchants and $267,000 among Level 2 merchants. This alone is the biggest hinderance in accepting payments on site. There are also solutions such as Aria that help reduce these costs. Aria even goes ahead and assures to have their solutions deployed in a month or less for $30,000. So I guess the field is now open to a large number of players even if they are not Level 1 or Level 2 merchants.

The deciding factor and rightly so, now is the balancing of volume vs revenue vs  upfront costs as earlier alright but there at a significantly smaller scale of economics.