As technology continues to reshape how we handle transactions, more financial institutions are adopting advanced payment technologies. This shift has opened doors for the growth of payment gateway providers, making it easier to streamline transactions. According to a report by The Business Research Company, the payment gateway market size will continue to grow rapidly in the coming years and is projected to hit $71.11 billion by 2028.
Small banks are at the forefront of integrating payment technologies. A partnership with a payment gateway provider helps small banks face unique challenges in the financial landscape and stay competitive. It also enhances their digital capabilities to expand service offerings, which empowers smaller institutions to meet evolving customer demands.
iCG Pay, formerly iCheckGateway.com, is one of these partners that small banks can use to boost their payment processing capabilities.
In this article, we’ll explore the pivotal role that payment gateway providers play in supporting small banks.
What Does a Payment Gateway Provider Do?
A payment gateway provider is a third party that serves as the intermediary between merchants' services, banks, and customers, facilitating secure online transactions. The gateway encrypts sensitive payment information, authorizes transactions, and securely transmits digital payment information between parties.
With their advanced technologies, they allow businesses to process ACH payments, debit and credit card payments, and real-time payments. Businesses that work with payment gateways access additional services, such as fraud detection and seamless integration with various payment methods and platforms.
How Does a Payment Gateway Work for Small Banks?
To keep up with the changing shift to digital payments, small banks require a payment gateway for online payment processing. Here’s how payment gateways work for these financial institutions:
- When a customer makes a purchase, the payment gateway securely encrypts the payment details, such as credit card information, and transmits it to the bank for authorization.
- The small bank then verifies the transaction and communicates the approval to the payment gateway.
- If approved, the payment gateway notifies the merchant, allowing the bank transfer to proceed.
- The payment gateways facilitate the settlement process, transferring funds from the customer's account to the merchant's account.
By facilitating these secure and efficient payments, these gateways enable banks to offer online banking services and support e-commerce transactions while boosting data security.
Therefore, it’s essential for small banks to choose a reliable payment gateway that meets their needs.
What Are the Advantages of Payment Gateways for Small Banks?
Customers today are more digital-savvy. They prefer to work with small banks that offer a seamless online payment experience. Payment gateway providers bridge this gap by providing resources to offer this service. Here are the benefits your bank gets from partnering with a payment processor:
Competitive Edge
The U.S. has over 4,000 small banks. Therefore, to compete against these other financial institutions, you need to offer a better payment experience. Integrating with payment gateways allows you to process electronic payments, giving your small bank a level playing field with big players in the industry.
You can expand your digital footprint by catering to tech-savvy customers who prefer convenient and seamless digital banking solutions. This way, you can attract new customers and retain existing ones who value the flexibility of managing their finances digitally.
Increased Revenue Streams
Payment gateways like iCG Pay allow small banks to accept multiple payment methods. When you work with such a partner, you can diversify your revenue streams by generating income from multiple customers. With more payment options, you can attract more clients. Additionally, this boosts your chances of expanding the customer base and increasing revenue streams.
Enhanced Security Measures
Payment fraud remains one of the key challenges for most financial institutions. In 2023, there were over 1 million identity theft reports, especially credit card fraud. Because of this, small banks have to maintain high security standards to protect sensitive financial information.
An advantage of working with payment gateways is their robust security features that protect against fraud. With advanced encryption technologies and fraud detection mechanisms, small banks can provide customers with peace of mind, knowing that their transactions are secure.
Improved Customer Experience
A payment gateway provider enhances the overall customer experience by providing convenient and secure payment options. Customers can enjoy the flexibility of making payments online, whether it's paying bills, transferring funds, or making purchases. Since the transactions are secured and streamlined, this could enhance satisfaction and positive word-of-mouth referrals for your small bank.
How Do You Set up a Payment Gateway for Your Small Bank?
Implementing a payment gateway for a small bank involves several key steps to ensure a smooth integration process:
Research Different Payment Processors
Before you pick a payment gateway provider, conduct thorough research. During your research, evaluate factors such as security features, scalability, ease of integration, transaction fees, and customer support. Ensure you pick a payment gateway provider that aligns with your bank's goals, budget, and technological capabilities, especially, if you want to accept payments online.
Integration and Test
Once you choose a payment gateway provider, you need to integrate it into your existing business systems. Look for a provider offering APIs and developer tools that make integration into your banking infrastructure easy. Additionally, you should conduct testing to confirm compatibility, functionality, and security.
Test various transaction scenarios, including different payment methods, currencies, and customer interactions, to identify and address any issues.
Training
You also need to provide comprehensive training and support to bank staff involved in managing and operating the payment gateway. This approach allows you to educate employees on how to use the payment gateway, troubleshoot issues, and address customer inquiries.
Why Should You Choose iCG Pay?
iCG Pay can effectively support your small bank because we offer customizable APIs to seamlessly integrate with your native software systems. Our innovative payment technologies can serve banks that already accept multiple payment options. iCG Pay simplifies payment management for your small bank with these payment services:
- Hosted payment portals
- Virtual terminal
- Recurring payments
- iFrame
- IVR
- Email invoicing
- SMS payments
- ACH
- Credit card
With iCG Pay, you don’t have to worry about your payment information. Our secure platform adheres to industry security standards, including PCI-DSS, to support all payments. Contact us to speak with someone about your specific payment processing needs.
