Magento 2 Payment Methods and Options

Magento 2 Payment Methods: Default Options

Magento 2 offers a variety of built-in payment methods to cater to different customer needs. These default Magento 2 payment options include:

Check/money order: customers can pay by sending a check or money order to a store's address.
Bank transfer: customers can pay by transferring money to a store's bank account.
Cash on delivery (COD): customers pay for their order when they receive it.
Purchase order: customers can pay for their order by sending a purchase order to a store.
Zero subtotal checkout: customers can checkout without entering any payment information if their subtotal is zero.
PayPal is a widely-used online payment gateway that allows secure transactions. It's good for both domestic and international transactions and offers features like fraud protection.
Braintree is a full-stack payment platform known for its ease of use and ability to accept, process, and split payments. It offers various payment methods including credit cards, debit cards, PayPal, and even cryptocurrencies. One of its advantages is the seamless customer experience it offers, including mobile payments.

You can find the detailed guide on how to configure the native Magento 2 payment methods in the Adobe Commerce docs.

Popular Magento 2 Payment Gateways

In addition to the default payment methods, Magento 2 also allows integration with popular payment gateways like PayPal, Braintree, Stripe, Klarna, Authorize.net, and Amazon Pay.

Stripe

Stripe is another online payment processing platform that supports various payment methods, including cards and digital wallets. It's known for its easy-to-use features and robust security measures.

Top features:

• Stripe supports a wide range of payment methods, including credit cards, debit cards, PayPal, Apple Pay, and Google Pay.
• Supports 3D Secure authentication for added security.
• Offers a variety of pricing plans to fit your budget. Plans start at 0% + $0.30 per transaction.
• Easy to set up and integrate with Magento 2.
• Provides excellent customer support.
• Subscription Management. Stripe offers robust subscription management features, allowing merchants to set up recurring billing and manage customer subscriptions effortlessly

Pros

Cons

Stripe is a well-established and reputable payment gateway. It offers a wide range of features and benefits, including 3D Secure authentication and fraud protection. Stripe is easy to set up and integrate with Magento 2. Stripe offers excellent customer support. Developer-Focused: Stripe's powerful API and extensive documentation make it an ideal choice for businesses with complex technical requirements.

Stripe's fees can be higher than some other payment gateways. Stripe's pricing plans can be complex and difficult to understand. Limited Dispute Resolution: As a merchant using Stripe, you'll be responsible for handling disputes directly with customers rather than relying on the payment gateway.

The Stripe method can be added by installing the official Stripe module for Magento 2. The configuration of this module can be found in the official Stripe documents.

Klarna

Klarna is a Swedish payment provider that allows customers to pay for their purchases later. It is a popular payment method in Europe, but it is also available in other countries.

Key features of Klarna for Magento 2

• Pay Now: enables customers to pay immediately using various methods such as bank transfers or card payments.
• Pay Later: gives customers the flexibility to receive goods first and pay within a specified period, generally 14 or 30 days.
• Financing: allows customers to pay for their purchases over time through installment plans.
• On-site checkout: Klarna provides a smooth, integrated checkout experience within the merchant's website, reducing cart abandonment.
• Risk assessment: Klarna handles risk assessment, enabling merchants to be assured of payment even if the consumer chooses the 'Pay Later' option.
• Multi-currency support: supports multiple currencies, making it convenient for international transactions.
• Automated notifications: sends automated notifications for due payments, reducing the administrative load on merchants.
• Detailed reporting: provides insightful reporting features to help merchants track and analyze sales.

Pros

Cons

Enhanced user experience: Klarna’s range of payment options offers something for everyone, providing a smoother, more enjoyable user experience. Increased conversion rates: by providing a simplified and secure checkout process, Klarna helps in reducing cart abandonment and thus increasing conversion rates. No risk for merchants: Klarna assumes the risks related to payments, ensuring merchants always get paid. Global reach: with support for multiple currencies, Klarna allows merchants to reach a broader, international customer base. Simple integration: Klarna is relatively easy to integrate into Magento 2, requiring little technical expertise.

Fees: merchants have to pay fees to Klarna for its services, which can eat into profit margins. Not universally accepted: While it’s popular in Europe, Klarna is not as widely recognized in other parts of the world like Asia and Africa. Regulatory challenges: As a financial service, Klarna must adhere to a variety of regulations, which can occasionally complicate international sales. Limited control for merchants: The payment process and risk assessment are fully controlled by Klarna, which may not be suitable for all merchants.

The Klarna payment method can be added by installing the official Klarna module for Magento 2.

Authorize.net

Authorize.net is a well-known payment gateway service provider that enables merchants to accept credit card and electronic check payments from websites, retail stores, mail order/telephone order, and even mobile devices. It's a solution suitable for businesses of all sizes and types, including those that use e-commerce platforms like Magento 2.

Top features of Authorize.net for Magento 2

• Credit card and eCheck processing: enables merchants to accept a wide range of payment options including all major credit cards and electronic checks.
• Advanced fraud detection: comes with a suite of advanced fraud detection filters and features to secure transactions.
• Recurring payments: allows for subscription or installment-based payments through the automated recurring billing feature.
• Secure customer data management: offers a secure way to store sensitive customer data through its Customer Information Manager (CIM).
• Simple checkout experience: provides a streamlined and customizable checkout process that can reduce cart abandonment rates.
• Hosted payment forms: merchants can make use of Authorize.net's hosted payment forms to ensure PCI compliance.
• Transaction reporting: provides extensive, detailed reports on transactions, making it easier for merchants to keep track of sales and customer behavior.
• Multi-currency support: allows for international transactions by supporting multiple currencies.

Pros

Cons

Reliability: Authorize.net is a stable and reliable payment gateway, trusted by many businesses worldwide. Robust security: advanced security protocols and fraud prevention features make it one of the safer options for online transactions. Versatility: from online to in-store to mobile transactions, Authorize.net provides a wide array of use-cases for businesses. Easy integration: Authorize.net is designed to easily integrate with Magento 2 and other e-commerce platforms. Customer data management: the Customer Information Manager allows for easy and secure data storage, making future transactions more straightforward for repeat customers.

Cost: the service comes with various fees, including transaction fees, monthly fees, and setup fees, which may be a concern for small businesses. US-centric: while it does offer multi-currency support, Authorize.net is generally geared more towards businesses based in the United States. Complexity: some of its advanced features and settings might require a steep learning curve, especially for those new to online payments. Customer support: while they do offer support, it's not always rated as highly as some of the newer, more agile competitors.

The Authorize.net payment method can be added by installing the module from PARADOX LABS for Magento 2.

Amazon Pay

Amazon Pay is a payment processing service provided by Amazon. It allows consumers to use their Amazon account credentials to make purchases on third-party websites, including e-commerce platforms like Magento 2. By using Amazon Pay, customers can bypass the traditional checkout process, streamlining their experience and potentially increasing conversion rates for merchants.

Top Features of Amazon Pay for Magento 2

• One-click checkout: leveraging Amazon's 1-Click technology, it offers a quick and convenient checkout process.
• Secure payments: utilizes Amazon's robust fraud protection and payment security measures.
• Multi-currency and multi-country support: Amazon Pay supports multiple currencies and is available in many countries, enabling you to reach a global audience.
• Order management: allows for seamless integration with Magento 2’s order management system, so you can handle Amazon Pay orders like any other transaction.
• Voice commerce: with Amazon's Alexa, you can also provide voice-activated payment options to your customers.
• Inline checkout: allows customers to stay on the merchant’s website during the entire checkout process, instead of being redirected elsewhere.
• Automated payment reconciliation: offers easy-to-understand reports and facilitates straightforward payment reconciliation.
• Chargeback protection: Amazon Pay offers fraud protection capabilities that can reduce the incidence of chargebacks.

Pros

Cons

Trust factor: consumers trust Amazon, and by association, they may be more inclined to trust a site that offers Amazon Pay as an option. Increased conversion rates: the simplified and familiar checkout process can lead to reduced cart abandonment and higher conversion rates. Ease of use: both the integration and the user interface are straightforward and intuitive. Global reach: multi-currency and multi-country support make it easier to handle international transactions. Lower fraud risk: Amazon’s fraud protection measures offer an additional layer of security.

Fees: Amazon Pay comes with transaction fees, which can cut into your profit margin. Limited customization: Being a third-party service, you have limited control over the checkout experience compared to a fully customized solution.

The Amazon Pay payment method can be added by installing the official Amazon Pay module for Magento 2. You can find more details about Amazon Pay here.

Worldpay

Worldpay is a leading global payment processing company that offers a wide range of solutions for both online and in-store transactions. Acquired by FIS in 2019, Worldpay provides a comprehensive set of payment services to businesses of all sizes, and it integrates well with e-commerce platforms like Magento 2.

Key features of Worldpay for Magento 2

• Multi-currency support: it allows businesses to accept payments in multiple currencies, facilitating international sales.
• Omni-channel payments: provides seamless payment experiences across various channels including online, mobile, and in-store.
• Advanced fraud protection: includes risk management and fraud screening tools to protect against unauthorized transactions.
• Tokenization and secure storage: offers secure methods for storing sensitive customer data.
• Recurring payments: supports subscription models and other forms of recurring payments.
• Dynamic 3D secure: offers additional layers of authentication for online credit and debit transactions.
• Customizable payment pages: allows businesses to customize the checkout experience to match their brand.
• Detailed reporting and analytics: provides robust reporting tools to help businesses analyze performance, manage risks, and improve customer experience.

Pros

Cons

Global reach: one of the largest payment processing companies with a significant global footprint, making it ideal for international businesses. Versatility: capable of handling various types of transactions, from online to in-store to mobile, providing a unified payment solution. Strong security features: advanced fraud protection and secure data storage options provide an added layer of security. Ease of integration: Worldpay provides various APIs and SDKs, making it relatively easy to integrate with Magento 2. Reliable support: offers 24/7 customer support to resolve any issues promptly.

Cost: charges a variety of fees, including transaction fees, monthly fees, and setup fees, which can add up for smaller businesses. Complex pricing structure: pricing can be complicated, requiring businesses to closely examine contract terms. UI and UX limitations: while it offers customization, the user interface and experience may not be as sleek as some of its more modern competitors. Regional limitations: despite its global reach, Worldpay may not support all local payment methods preferred in certain regions.

The WorldPay payment method can be added by installing the official WorldPay module for Magento 2.

Payment method versus payment gateway

Payment Method

A payment method is the way that a customer chooses to pay for goods or services. It's the means by which the payment transaction occurs between the customer and the merchant.

Examples:

• Credit/Debit Cards (Visa, MasterCard, American Express)
• Digital Wallets (Apple Pay, Google Pay, PayPal)
• Bank Transfers
• Cash
• Cryptocurrency (Bitcoin, Ethereum)
• Buy Now, Pay Later (Klarna, Afterpay)
• Gift Cards
• Checks

Characteristics:

• Customer-focused: payment methods are chosen by customers based on their convenience, trust, and any incentives provided.
• Variability: different regions and industries may prefer or require different payment methods.
• Transaction types: some payment methods may be better suited for one-time payments, while others are ideal for subscriptions or recurring charges.

Payment gateway

A payment gateway is a technology used by merchants to accept debit or credit card purchases from customers. The gateway acts as a middleman between the merchant and their bank, securely transmitting payment data for authorization and settlement.

Examples:

• Stripe
• Authorize.net
• PayPal
• Worldpay
• Adyen
• Braintree

Characteristics:

• Merchant-focused: payment gateways are chosen by merchants based on factors like fees, ease of integration, security features, and supported payment methods.
• Security: payment gateways use encryption and other security measures to protect sensitive financial data during the transaction process.
• Transaction handling: they handle tasks such as transaction authorization, payment processing, and anti-fraud checks.

Key differences

• Scope: payment methods are the options available to customers for making a payment, while a payment gateway is the service that processes those payments.
• Role: payment methods are part of the “what” in a transaction (what method to use to make a payment), whereas payment gateways address the “how” (how to securely process that payment method).
• User interaction: customers choose payment methods. Merchants, on the other hand, choose payment gateways.
• Technical complexity: payment gateways involve more technical layers, including encryption and security checks, whereas payment methods are simply different forms of currency or credit.