A payment gateway is an exclusive e-commerce app that enables payments for businesses, merchants, retailers, small owners, etc. This set up is just as good as a physical POS, mostly found inside retail stores. A payment gateway inscribes confidential data like debit/credit card information for safe transfer & exchange between parties (customer & merchant).
How can Payment Gateways Work?
A payment gateway allows transfer of information over a payment portal along with a front end processor.
Below we present to you a detailed look at how payment gateways work:
1. A complete payment processing center engages credit and debit cards using an internet facility. No special terminal will be required when such an environment is created. All the payment transactions can be conducted and tracked real time through the website.
This payment gateway can be easily merged with a website and shopping basket. Make a choice of the best of products or services on a website and checkout on the main page. Once the items total up on the page, additional charges are calculated on it (taxes+ shipping) and gathers customer addresses for shipping and billing. The payment gateway takes into account the transactional information and the processor takes a call on approval or decline.
To be precise, there are 3 major steps in the working of a payment gateway. The same can be viewed in details, starting from a customer purchase decision using a credit card. They are: authorization, settling and reporting.
1. Authorization
All purchases made with a credit and debit card through a payment gateway must be authenticated by a credit card issuer. The gateway verifies credit card information and creates a link between all the parties. This is also helpful in swift transaction processing with a quick response time.
2. Settling
The payment gateway combines all transactions and transmits in a row for processing. This is popularly known as settling and sends the transaction to the bank for payment.
Some companies offer instant settlement of transactions at the spot time. If there are transactions due, then no charges are levied on it. Once settled, funds get about 2 working days to get deposited.
3. Reporting
All the transactions are later recorded and reported too. One can view, print or download with the help of payment gateway features.
With an excellent payment gateway, a large number of users can simultaneously use the payment gateway (this will ease a lot of transactions).
Overview of Payment Gateway:
A payment gateway also has some fraud screening mechanisms, inbuilt. This will significantly reduce illicit activities to an extent. Also, fraud will be cut off, thereby eliminating liabilities arising from credit card transactions in the payment gateway process. Some payment gateways also have virtual terminals to make possible transactions. This is helpful in getting many orders online and offline.
When picking up a payment gateway, you must know how many transactions will be exactly processed. PayPal and Stripe are quite suitable for low-volume sales. This is not just cheap but also easy.