The past decade has seen significant technological advancements that have revolutionised our lives. As technology provides convenient access to more online services, such as digital banking, more individuals and companies are turning towards e-payment solutions. The figures provided by The World Bank, which noted that two-thirds of adults worldwide now use digital payments, echo this trend.
Notably, the global e-payment market is projected to continue with its growth trajectory at a compound annual growth rate (CAGR) of 15.5%, based on predictions shared in the Digital Payment Global Market Report 2023. In a world that is rapidly transitioning towards cashless transactions, payment gateways have become increasingly important for both consumers and e-commerce businesses in Cambodia alike.
What is a payment gateway
Payment gateways, also known as payment processors, payment services, or payment solutions providers, act as intermediaries between e-commerce websites and payment processors. While the process comprises multiple phases to complete:
- Initiation: When customers are ready to pay for their online shopping cart, the payment gateway collects their card information and other relevant details.
- Verification: The payment gateway verifies the accuracy of the information and checks if sufficient funds are available before sending the information to the customer's issuing bank to initiate the transaction.
- Authorisation: Once the payment data is transmitted, the payment gateway transmits the message back to the merchant's website to indicate whether the transaction is approved or declined.
- Settlement: When authorised, the payment gateway helps in settling the funds between the relevant bank accounts.
Through this, payment gateways enable the automatic processing of payments, significantly minimising the time spent manually processing transactions and the errors arising from this process. By reducing the friction of transactions, payment gateways enable companies in Cambodia to tap into the global market and grow their business.
Types of e-commerce payment systems
Picking the wrong payment gateway could alienate your customers and result in costly fees. As such, it is essential to know the pros and cons of each type of system before subscribing to one. Here are some popular payment gateways you can consider when you start your e-commerce business in Cambodia that is equipped to tap into global market opportunities.
1. PayWay
For e-commerce companies in Cambodia, ABA Bank's PayWay is typically the preferred payment provider and the leader of the local e-payment market, and it offers the following advantages:
- Reliable: Backed by ABA Bank, recognised as the best bank in Cambodia, this payment gateway will be trusted by customers, preventing your e-commerce business from losing out on sales because of consumers’ wariness about your platform’s payment method.
- Secure: Backed by robust security measures, such as data encryption, 3DS 2.0 protocol and rules-based fraud detection, you can trust PayWay to keep your platform’s transactions secure, minimising risks of business reputation damage over cyber breaches.
- 24/7 support: This ensures minimal downtime to your business.
Conversely, the downsides of PayWay are:
- Limited currencies: PayWay only accepts KHR and USD. While this opens up opportunities to the US, a major market, customers in some other countries may find your products costlier when converted back to their local currency, potentially limiting your business only to specific regions.
- High, varied transaction fees: The transaction fee ranges between 3.6% and 3.8% for each transaction, which is relatively high and can eat into your profit margin.
- Implementation barriers: This payment gateway is not supported by Shopify, which limits its use for many e-commerce businesses since Shopify is one of the leading e-commerce platforms in the market.
2. iPay88
iPay88 is a relatively new player in Cambodia’s digital payment market, and it comes with the following benefits:
- Payment flexibility: It is a comprehensive payment gateway service that accepts major credit cards. It can also connect with numerous banks, including ACLEDA and Cambodian Public Bank, as well as various payment services such as Wing, Alipay, and WeChat Pay. Complementing this is the diverse currencies accepted, which include AUD, CAD, EUR, HKD, INR, IDR, MYR, PHP, GBP, SGD, THB, USD and TWD. This enables you to expand your business to markets abroad, including China, one of Cambodia’s top import partners. If you are seeking a payment gateway solution not limited to a specific bank, iPay88 is worth considering.
However, this online payment method also has its downsides:
- Limited refund options: iPay88 is not authorised to cancel orders or provide refunds, as they do not handle the goods. This can pose a challenge for e-commerce businesses as they may have to handle refunds and cancellations independently, which can be time-consuming and lead to customer dissatisfaction if not appropriately managed.
3. ACLEDA
ACLEDA, a prominent Cambodian bank, has established a strong foothold in the country's banking industry since its inception, and the upsides of using its payment gateway are:
- Easy integration: The payment gateway system by ACLEDA is based on MIGS (MasterCard Internet Gateway Service). This allows it to seamlessly integrate with any MIGS plugins for widely used e-commerce software, which is a significant advantage over other alternatives that may require custom coding solutions.
- Reliable: The bank’s reputation lends credibility to the digital payment system.
- Convenient payment: ACLEDA’s payment gateway accepts major credit and debit cards. These include JCB, UnionPay, Diners Club International, and Visa and MasterCard, both of which are accepted in more than 200 countries and territories worldwide.
Nonetheless, this payment method also has its drawbacks:
- Troublesome registration: To apply for this payment gateway, you must have an account with ACLEDA Bank. You will also need to visit a designated location and present several mandatory documents.
- Limited payment currency: All e-payments are automatically converted to USD, which means that an exchange rate is incurred, which can be a deterrent for purchase for some consumers.
4. Cathay United Bank
Cathay United Bank is one of the pioneers in introducing an online gateway for payments. The perks of using this payment gateway include:
- Easy integration: As a payment gateway based on the MIGS system, it is widely accepted among e-commerce platforms.
- Convenient payment: Cathay United Bank's payment gateway supports transactions using major cards, such as Visa, MasterCard, and JCB cards.
The key limitation of this payment method is its high transaction fees, charged at a rate of 4.2%.
