What is a payment gateway?
A payment gateway is what keeps the payments ecosystem rolling smoothly, as it enables online payments for consumers and businesses. If you’re an online merchant, you don’t need to be a payment gateway expert, but it’s worth understanding the basics of how an online payment flows from your customer to your bank account.
We need to identify the key players in online payments. When a customer clicks on the “Pay” button on your website, these are the key players involved in the payment process:
The merchant: this is you, i.e an online business operating in any vertical (travel, retail, eCommerce, gaming, Forex, etc), offering a product or service to customers
The customer: the customer, also called a cardholder, who wants to access the products or services that the merchant is selling, and initiates the transaction
The issuing bank: the issuing bank is the customer’s bank that issues the cardholder’s credit or debit card on behalf of the card schemes (Visa, Mastercard)
The acquirer: also known as the acquiring bank, the acquirer is the financial institution that maintains the merchant’s bank account (known as the merchant's account). The acquiring bank passes the merchant's transactions to the issuing bank to receive payment
What is a payment gateway?
The definition of a payment gateway is the technology that captures and transfers payment data from the customer to the acquirer and then transfers the payment acceptance or decline back to the customer. A payment gateway validates the customer’s card details securely, ensures the funds are available and eventually enables merchants to get paid. It acts as an interface between a merchant’s website and its acquirer. It encrypts sensitive credit card details, ensuring that information is passed securely from the customer to the acquiring bank, via the merchant.
In other words, the payment gateway works as the middleman between your customer and the merchant, ensuring the transaction is carried out securely and promptly. An online payment gateway can simplify how merchants integrate the necessary software. As the middleman during the payment processing, the gateway manages the customer’s sensitive card details between the acquirer and the merchant
Why do we need a payment gateway?
You may be thinking, why do you need a payment gateway if it’s only a middleman? Before we answer this question, we'll take a step back and highlight that online payment is processed as a card-not-present transaction. The customer's card cannot be physically swiped on a POS terminal, as you would normally do if you processed the payment in a brick-and-mortar shop. Therefore, you can only rely on the card information that the customer is entering on the payment page. But, how can you be sure that the card the customer is using is their card? In card-not-present transactions, the fraud risk is significantly higher, and this is where a payment gateway does its magic.
What would happen if you take the payment gateway out of the online payment flow? Fraudsters would have easier access to card data you process, exposing your business to fraud and chargebacks. On top of that, fraudsters would also find additional ways to initiate illegitimate transactions, leaving you even more exposed to fraud and damaging your brand reputation.
A payment gateway is the gatekeeper of your customer’s payment data. For online merchants, a payment gateway relays the information from you, the merchant, to the acquirer and the issuing bank using data encryption to keep unwanted threats away from the sensitive card data. Aside from fraud management, a payment gateway also protects merchants from expired cards, insufficient funds, closed accounts, or exceeding credit limits.
Online Payment Gateway Features:
- Easy integration with the website
- To secure online credit card processing use of industry-standard SSL (standard sockets layer) technology, this technology is generally used worldwide, to encrypt this data while processing the credit card.
- Visa-Ecom has strict in-house security measures to ensure the confidentiality of your client information.
- We have critical security measures to ensure that sensitive information such as your client’s personal information and credit card details are safe.
- Your clients enter all their personal information and credit card details on a secure server and the same is encrypted before it is transmitted over the Internet to the bank payment gateway.
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