Payment Gateway Explained
The payment gateway is simply an online application service provider that authorizes the payment for online purchases. Payment gateways are what allow the buyer to pay the seller and the seller to then transfer the money into their bank account. The payment gateway protects credit card details by encrypting all sensitive information, like a credit card number. So in this way the payment passes securely from the buyer to the seller and from the seller to their account. It's the process that occurs when you press 'pay now', 'complete order' or an equivalent button on your computer screen. The whole process of paying for an order in this way takes about three to four seconds to actually complete, but a lot goes on in that few seconds. If a trader wishes to sell online they will find that they do need a payment gateway added to their site. It allows a buyer to pay for any order quickly and without too much hassle preferably without directing them away from your website in order to make the payment.
How does it work?
The payment gateway gets to work when the buyer places an order by pressing the pay now button, entering their credit card details online or alternatively over the phone. If this is done via the computer the buyer's web browser encrypts the information. This is done via SSL encryption (secure socket layer). The seller will then forward the payment to their payment gateway. This will then forward the payment details to the payment processor that is used by the seller's bank. The credit cards issuing bank will receive the authorisation request and then sends the response back to the seller with the response code. It will also tell the seller if the payment has been approved or not. It can also tell the buyer why a transaction has been declined (insufficient funds etc). The processor will then forward the information to the payment gateway which subsequently receive this reply and relays this information to a specific website where this info is interpreted as a relevant response then this is sent back to the merchant and cardholder. As mentioned before all this takes place in a few seconds. The seller can then forward all their cleared payments in a batch at a time to their bank, funds will then be cleared into their bank account within three working days approx. All of this without revealing the buyers or the seller sensitive banking or credit card information.
Where can you find Payment Gateways?
Lots of payments gateways available also supply the tools to automatically detect potential fraud. The payment gateway is essentially a way to have all information protected so no one sees your card details in full when an online order is placed. Many e commerce hosting websites will include a payment gateway as part of their package. If you want to add your own onto your own site this will have to be done manually by yourselves. There are many payment gateway websites available which are tailored to add their services to your website. Payment gateways do charge a fee and it is best to shop around for the best deal. Some offer a monthly price and some offer to charge you per transaction, some do both. This may add up if a lot of online sales are completed. Make sure to choose one that can process all major credit and debit cards. The online company that is chosen should also offer support for set up and maintenance as part of their package. The payment gateway is a necessity with online stores and you will find that you will need one if you want to trade online.
