payment gateway description:As per the reports of CAGR, there is around 11.6%
growth in the use of payment gateway in India from 2023 to the expected year 2028.
Also, there has been a sharp rise in the payment sector, especially from mobile or digital wallets,
since COVID-19. India has an evolving and diversifying system regarding the use of payment gateways.
It is one of the fast-moving technologies, helping people immediately receive payments or money in
their bank accounts.In this article, we explore the phrase, payment gateway description and how it
is necessary to integrate a payment gateway that is in trend, easy to use and
flexible concerning the use of debit cards, credit cards and net banking.
Online shopping, whether in groceries, fashionable products or anything
else, is complete with online payments.
payment gateway description
In this article, you will find a complete payment gateway description,
how it works, its benefits and how it can help any website or e-commerce network run fast.
Let’s Start…
Certain payment gateways work as third-party service providers or are
connected directly with banks if you sell anything online or offline.
Using these payment gateways, you can transfer the funds using
your credit card or bank account and directly pay from bank to bank.
The technology used by payment gateway is an intermedia one that –
- Securely captures
- Stores and transmits the details or information.
- Captures cardholder data from one card to another
- Helps you transfer money online from a website/mobile/bank to another website/mobile/bank.
- Helps to communicate with the merchant and the customers to decline or receive any notification regarding the payment processing.
In this payment gateway description, we will also tell you how the gateways
support alternative methods like ACH bank transfers and how the payment gateways work.
In general, the payment gateways facilitate the transaction. Such gateways help validate the funds, details, and the card’s online or recent availability or active status. The payment gateways
also help to know about the bank details of the merchant/ customers, creating
a connection between the cardholders, etc., and it is how the Merchant Services Providers work.
Main Features of a Payment Gateway
- A payment gateway ensures data security, provides encryption for
- data protection, real-time processing transactions, and a secure or
- safe integration of payment methods.
- The payment gateway mediates between the merchant and the customer, helping in seamless transactions.
- It is a system that helps safely transfer of money from the customer’s account to the merchant’s account.
The Framework of a Payment Gateway – How Can You Use It?
A payment gateway can be used through two different methods –
- One, as an online payment portal and
- Second, as an in-store premises
Online payment requires a third-party service mode or works with the help of an application
programming interface (API). The gateway website first connects with the payment processing network,
and then it gives a response to the issuing bank. After the response, it completes the procedure.
With an in-store premise, when you use a payment gateway, you will
require a physical card or POS terminal, further connecting you with the
processing network. In both these methods, you require a secure internet connection.
The Components in the Payment Gateway Ecosystem
Merchant or Seller
A merchant or a seller is an individual who is selling goods and services either online or offline.
For a merchant to have online payment, they need a merchant account,
which is a type of bank account which allows them to receive the funds. When you do online payment,
you need an integrated payment gateway, which will further help you with secure payment transactions.
You will receive all your money in the merchant account only. To open a merchant account, choose a
provider or payment gateway that will align with your requirements.
Customer
The customer is another participant in the payment gateway ecosystem who will
make online payments through debit cards, credit cards, UPI, online websites,
net banking or wallets. They are the ones who are purchasing your goods and services.
Acquirer and Issuer Bank/Domain
Two banks work in the payment gateway ecosystem – the acquirer bank,
where the merchant receives money. It is where the financial transaction ends or the final destination
where the payment gateway is processed to have the payment.
On the other hand, the issuer bank is the bank where the transaction originates.
It is the customer’s bank account paying for the product. The issuer bank is
the one which represents the customer and supports different payment methods such
as credit card, debit card, net banking, UPI, QR scanning and other modes.
Payment Gateway
A payment gateway acts as an intermediary programme between the merchant’s website and the acquirer + issuer’s bank. When the customer makes the payment through the merchant’s website, it is the payment gateway that allows easy money transfer. The payment gateway is thus helping transfer payment information, settlement of the transacted money, and transaction authorisation.
Payment Processor
The payment processor handles the technology between the merchant’s website,
the acquirer bank, and the issuer bank. It maintains the route or validates the secure transaction.
The information of banks (acquirer and issuer bank) is being exchanged and
handled with the help of a payment gateway and the payment processor.
Varieties or Classification Of Payment Gateway
This payment gateway description will provide complete details about the
payment gateway and its types. In general, there are three types of payment gateways.
There might be different names on different sites for these payment gateways, but the basic
role is the same, and that is how they are differentiated.
On-site payments.
In this mode, as a customer, you upload your credit card details directly on the website or merchant’s
app. So, what you write in the space for credit card details should be written carefully and safely.
This payment mode is mainly available for large-scale businesses handling the server themselves.
The advantage is that the customer is making/entering the payment details, i.e., you have complete
control & responsibility. Any improvement to the website or shopping experiences of the customer can
bring a big change for the customer or those handling the high sales.
Checkout on-site, and payment off-site.
In this payment gateway method, the payment is processed in the back-end, and the checkout occurs at the front-end or site. In this payment gateway, the security is high on the back end for the simplified payment procedures. As a merchant, you cannot control the user’s entire experience here.
- First, the customer will go to the “payment check out” page, where the page will open a screen showing the credit card details to be filled in by the customer.
- Second, the PaymentProcess checkout pane will show the plugin for off-site payment.
- After the plugin redirects to the off-site page, the customer will provide credit card/debit card details.
- After the customer hits the “submit” button, it will complete the payment process.
- The payment gateway will make payment through “on-return” or “on-notify” methods/modes.
- On this page, if the customer declines to provide payment details or cancels the payment, he will be redirected to the cancel URL.
Redirects.
The customer is redirected to pay through a different website or app in this payment gateway method. The customer is more confident as the information is in their hands, and if there is any card detail to be filled, the e-commerce website will not be responsible for the details or the customer’s data. In this payment method, you, as the e-commerce website owner, cannot customise or change anything concerning the payment page. You can add your brand logo and reassure the customers that you are still with them.
Why Should You Use A Payment Gateway Or A Payment Gateway Service Provider?
There are various benefits of using a payment gateway. But before we get into the payment gateway description for online businesses, let’s first discuss why you should have a payment gateway for your e-commerce business.
To secure your website: When a customer uploads the banking details at any ecommerce website, the transaction system should have encryption protocols. It should also ensure compliance with the Payment Card Industry Data Security Standard (PCI-DSS).
Fraud prevention: When you use a secure payment gateway, you get the prevention against fraud or getting into trouble. Various fraud-detecting tools are connected with payment gateways, which further help you to have protection against online theft.
Establishing a customer base: When you are using a payment gateway, you are serving the customer with the best reliable services like scanning QR codes, using internet banking, debit cards, credit cards and other modes. You are also making international customers have payments in their regional currencies. And this is how you are increasing the customer base for your website.
Streamlined transactions: The use of a payment gateway not only protects you against fraud but maintains a secure system between you and the merchant’s bank. The payment gateways are further connected with various modes like internet banking, wallets, etc., which can be used for seamless payment.
How do you integrate a payment gateway with your website?
In this section of the Payment Gateway Description, we have provided a step-by-step guide for integrating payment gateway with e-commerce websites. Before you choose a payment gateway, it is advisable to consider factors like transaction fees, charges on international fee transfers, and other domestic or international transactions.
Select an appropriate payment gateway.
First, understand what are your business requirements. Look for factors like transaction fees and the fees on international transactions. Such factors will help you understand how important it is to grow across or outside the country.
Set up a merchant account.
Certain payment gateways like Stripe allow you to make an account automatically when you save your details with the payment gateway, offering seamless payment support.
Obtain API keys
An API key is an important or unique identifier which connects you with the ecommerce website or the applications of the payment gateway. The API key communicates between the business’s platform and the payment gateway, allowing the website to interact with the gateway’s server.
Integrate the payment gateway.
Since every gateway is different, certain ecommerce websites like Shopify or WooCommerce offer extensions for the integration with the gateway. Otherwise, you must manually fill in the code and other details to integrate the gateway with your website.
Test the payment gateway.
A test before you go live is often acquired by the payment gateways called “Sandbox.” this further ensures that everything has been set up with the right things.
Go live
You can go live once you have tested the payment gateway and are satisfied with the services. At this point, the customer should be able to make payments through your website and integrated gateway system.
In the payment gateway description, the first thing you need to take care of is the data protection of your customers or visitors who are saving their bank details on your ecommerce website. You need an encrypted connection and a system that complies with PCI DSS [Payment Card Industry Data Security Standard] requirements for credit card information.
The Counting Benefits Of Payment Gateway
Moving forward with the payment gateway description, we will describe the benefits and how you can secure your purchases anytime with the encrypted and secure payment gateway.
Ease of Access
The payment gateway and the form that the customers need to fill out while making the payment on e-commerce websites should have an accessibility standard. For example, Amazon has a payment gateway that protects your data and saves your bank details for the future. It allows the customers to have a leisurely experience with the payment procedure, adding convenience to the use of the website.
Faster payments or payment within seconds
The things where there is talk about money safety and money security often disturb the people. Therefore, as a business owner, you should know how hard it is to make the payment and how hard it is to see that your hard-earned money has got stuck.
The payment procedure should be done within seconds, making the customers feel completely done with the payment process. The payment gateway should provide a win-win situation for the customers and the merchant or website’s owner.
Security & end-to-end encryption of data
On the one hand, there is advancement in coding and computer languages. People are eager to learn about hacking and cracking and similar educational prospects. The number one concern for any e-commerce website should be the payment security of the customer’s bank details.
- Soon after, the customer fills in the bank details in the empty box of the gateway, and it saves the details. It means that the issuing bank can access your details anytime.
- The payment gateway should comply with the standards of PCI DSS, which means that according to certain security standards, the customer’s card details should be processed securely.
- Also, the card services provide additional security to cardholders, called 3-D Secure. It gives the cardholder a one-time password to make payments online.
A Few Payment Gateway Examples
With this comprehensive guide of payment gateway description, we are now moving forward with a few examples of payment gateway and service providers. These payment gateways work in India; some help you accept international payments.
PayPal
PayPal is a highly reputed payment gateway available for multiple gateway options. It serves you with redirect payment gateway services. There is a PayPal Payflow gateway that will serve you with either a free checkout payment gateway hosted by PayPal or will serve you with a monthly fee for the customised checkout. In both cases or services, PayPal protects against fraud without an additional charge. Furthermore, your gateway system is completely secured against the threads or any rising threat.
Square
Square is a credit card processor and a payment gateway provider, which tends to work majorly for small businesses. Such a payment gateway requires a credit card processing system for in-person transactions and a minimal fee for manual transactions.
Stripe
You can use this payment gateway for mobile e-commerce, SaaS, non-profits and platform-based payments. This payment gateway is capable of a large volume of transactions. You are not charged when you make an account on Stripe, but there are minimal charges when you do transactions.
Apple Pay
This payment gateway helps the merchants to use Face ID and Touch ID. This payment app is enjoyable for those who want to have or maintain an electronic wallet and manage the payments. When you use PayPal, many apps are connected to this payment gateway, and Apple Pay is one of them. Since Apple Pay is available for those using iPhones, you can accept payments from nearly 1 billion users of iPhones.
Amazon Pay
With the use of Amazon Pay, you can do any payment like electricity bill, water bill, or TV cable bill, and it works like any other app for payments. It has around 200 million Amazon Prime members, making it a desirable payment option worldwide. The app is customisable, and there are several plugins available with it.
Authorize.net
It has been available in the use of ecommerce websites since 1996. There are around 33 countries where it is used, and it serves around 400,000 customers. A wide variety of platforms are available with it, including e-wallet, online payment, monthly billing, mobile payment, etc., and many other uses through credit cards, acceptable through PayPal, Apple Pay, and other platforms.
Adyen
Adyen is built for both point-of-sale and online purchases, and it consists of other major payment methods like payment through credit cards and Apple like Apple Pay. It can handle many transactions and is associated with brands like Uber, LinkedIn and Microsoft.
How Does The Payment Gateway Work?
This payment gateway description will provide complete details concerning the online payment processing. The simple process includes all the components [payment processor, issuer/acquirer bank/domain, merchant or seller, payment gateway] that serve one by one for payment processing.
- First, you will enter the card details on the e-commerce website. The website will either have a hosted payment gateway [that will direct you to another site] or a self-hosted gateway [that will let you fill in the payment details on its website].
- The payment gateway will forward the information to the acquiring bank or domain using a payment processor.
- The acquiring bank will forward the details to the card network and connect with your Mastercard, Visa, American Express, RuPay, etc. This card network will then forward the details to the issuer bank or domain and simultaneously run the fraud detection.
- The issuing bank, i.e., the customer’s bank, will authorise the payment and the check against fraud.
- If the customer has available funds, the issuing bank will respond positively to the card network and make the payment.
- Now, the issuer bank/domain and acquirer bank/domain will send a message to the customer and the merchant concerning the approval of the request for the funds.
This money transfer or the settlement can be instant per the pre-decided agreement.
Consider The Payment Gateway That Supports Different Currencies
In this payment gateway description, we want to focus on why you should use a payment gateway with support for multiple currencies.
With your e-commerce website, you would like to grow out of your native country. The payment gateway supporting multiple currencies will help you accept international customers’ payments. It will further enable you with easy or smooth global expansion.
You can boost customer trust and conversions if the integrated payment gateway supports multiple currencies. You are helping customers pay for their purchases in local or regional currencies. This feature is ultimately making you have high profits and high sales volume.
You can also gain a competitive edge by accepting payments in preferred currencies from your target customers. And this is the competitive advantage that you will have against your competitors.
Conclusion
In this digital age, payment gateways have become the backbone for payments and banking. There are different payment gateways, so each may have more and more uses with a few limitations that may render with its charges for “per transaction.” Before deciding how to integrate and how the payment gateways work, you must read about that gateway thoroughly. The gateway should suit the particular requirements of your e-commerce business. Also, for the success and competitiveness of the digital world, you must use a payment gateway.
With this comprehensive guide of payment gateway description, we aim to cover all the details concerning the use or working of such gateways. If you are considering a robust or user-friendly solution, you can use hosted or redirected payment gateway service providers.
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