If you’re starting your own online store or already run a small or medium-sized online business, you’ll need the right payment gateways to get paid quickly, securely, and at the right price. The role of the payment gateway in the online payment processing system has grown in importance in recent years, paralleling the exponential growth of online transactions.
The online payment gateway serves as a transactional intermediary between your online business and potential customers. On the contrary, it provides your clients with a high level of data and information security. The payment gateway provides your eCommerce service provider with a variety of features, including quick and seamless payment delivery and a wide range of useful functionalities.
What is a Payment Gateway?
A payment gateway is a type of software that ensures that a potential customer’s online payments to a merchant are safe and secure. It is analogous to a virtual and POS-based physical terminal in a physical store. It is determined by the provider, and the digital payment gateway offers a variety of payment options, such as credit and debit card payments, direct payments, and appropriate alternative payment methods.
The following parameters comprise the multiple participants in the payment processing method:
- The customer is an individual who wishes to purchase from your online store.
- The seller wishes to accept payment from a customer who wishes to purchase something from your website.
- The Payment Gateway is a digital medium that safely and securely transfers the customer’s transactional information from your website’s shopping cart to the payment processor. Keep the rest, and the payment gateway provides safe and secure connectivity between the potential customer and the website for transaction processing.
- The payment processor checks with your customer’s issuing bank to ensure sufficient funds are in the account before confirming or declining the transaction.
- The funds for the purchase will be obtained from the customer’s bank. This is known as the “Issuance Bank”
- The Acquisition Bank is your bank, and it provides you with an account where you can receive funds from your purchases.
How Does the Payment Gateway Work?
A payment gateway, as a typical consumer, works on simple, streamlined orders. You must go to any online store, select the necessary items, add them to your cart, and proceed to the checkout.
Similarly, you must also enter your payment information and confirm the placement of your order. You can now sit back and relax until your item is delivered to its destination. However, it appears more complex and complicated in the background of the picture.
The payment gateway consists of the six steps listed below:
The customer placed an order and provided payment information. Online transactions will be processed as “card-not-present.” Similarly, this may result in a faster processing rate. Once this information has been easily submitted, it is encrypted and personalized before being sent.
The encrypted data is first sent to the merchant’s processor, which handles the transaction.
The processor forwards the transaction data to the credit card association; credit card associations include Visa, MasterCard, Discover, and American Express.
Second, Irrespective of the approval or denial, whether the transaction is approved or denied, the card must be valid and have a large number of funds.
The transaction is authenticated, and the issuing bank sends the authorization back to the payment processing network parties.
The authentication process begins with the overall credit card association, followed by the merchant’s business. Finally, the payment gateway returns you to the online site.
However, the transaction takes only seconds, and the funds may not be available on your account for 24 to 48 hours.
What is the Function of a Full-Service Payment Gateway?
A digital payment gateway’s important role is to authorize the overall transaction procedure between the merchant and the potential customer. This gateway is an integral part of the overall online transaction process. It verifies transactions between merchants and prospective stakeholders or customers.
It assists the eCommerce platform in sustaining its existence by providing relevant payment convenience to its potential customers. Instead, it helps the eCommerce platform build rapport, which leads to quick, safe, and secure payments as well as convenience and success in the same time frame.
Payment gateways are now integratable into multiple digital platforms such as WordPress and WooCommerce by the leading payment service providers. As a result, several WordPress payment plugins provide safe and secure online payment processing.
Payment Gateway Multiple Operations
Payment Gateways will display orders with a variety of useful tools, and this screening procedure will channel fraud prevention. There are numerous tools and technologies for fraud detection that you can integrate into the following parameters:
- Sends Address Confirmation
- Checklists for AVS
- Innovation in Computerized Fingerprinting
- Examining the velocity pattern
- Identity transformation identification
- Patterns of geolocation
With a better understanding and conception of payment gateways in the eCommerce industry or online stores, you can choose any suitable payment gateway for your online store. As a result of the preceding discussion, you will gain a better understanding of digital payment processing and its significance in the eCommerce marketplace, as well as vice versa.