What is Payment Gateway
What is a Payment gateway ? In simplest words, a network that your clients use to send you money. Point-of-sale terminals, which are commonly used in physical and mortar establishments, are quite similar to payment gateways. To complete a transaction while using a payment gateway, clients and vendors must collaborate.
As it enables online payments for customers and businesses, a payment gateway is what keeps the payments ecosystem running properly. It’s not necessary for online merchants to be payment gateway experts, but it’s still important to understand the fundamentals of how an online payment moves from the client to the bank account.
Principal participants in online payments – What is Payment Gateway
The main participants in online payments must be identified before we go further into the concept of a payment gateway. Following a customer clicks the “Pay” button on your website, the following parties are crucial to the transaction:
1. The merchant: you are an online business that operates in any industry (travel, retail, eCommerce, gambling, etc.) and provides clients with a good or service.
2. The customer, often known as the cardholder, is the one who requests access to the goods or services the merchant is offering and starts the transaction.
3. The issuing bank: On behalf of the card schemes, the issuing bank is the bank that the client uses to issue the cardholder’s credit or debit card (Visa, MasterCard)
4. The acquirer, often referred to as the acquiring bank, is the financial organisation that manages the merchant’s bank account, also referred to as the merchant’s account. To receive payment, the issuing bank receives the transactions from the merchant from the acquiring bank.
How do payment gateways and processors work?
– What is Payment Gateway
A payment gateway is defined as a piece of software that collects, transmits, and receives payment information from the client to the acquirer before returning the acceptance or denial of the payment to the client. A payment gateway securely verifies a customer’s credit card information, confirms that funds are available, and eventually makes it possible for retailers to receive payment.
It serves as a conduit between an online retailer’s website and its acquirer. Sensitive credit card information is encrypted, ensuring that information is transferred securely from the customer to the acquiring bank through the merchant.
What is the purpose of a payment gateway?
– What is Payment Gateway
If a payment gateway is only a middleman, you might be asking why you even need one. We’ll take a step back before we respond to your query and emphasise that an online payment is treated as a card-not-present transaction. As you would typically do if you processed the payment in a brick-and-mortar store, the customer’s card cannot be physically swiped on a POS machine.
As a result, you are only able to rely on the card details that the customer enters on the payment page. How can you, however, be certain that the card the customer is using is actually their card? A payment gateway works its magic in transactions where a card is not physically present since the fraud risk is much larger.
What would happen if the payment gateway was removed from the process of accepting online payments? Your company would be more vulnerable to fraud and chargeback because fraudsters would have greater access to the card data you process. In addition, scammers would discover other ways to start fraudulent transactions, leaving you even more vulnerable to fraud and harming the reputation of your business.
The guardian of your customers’ payment information is a payment gateway. A payment gateway sends information from you, the online merchant, to the acquirer and the issuing bank utilizing data encryption to protect the sensitive card data from outside threats. In addition to managing fraud, payment gateway safeguards retailers from closed accounts, expired cards, insufficient cash, and exceeding credit limits.
How do payment gateways operate?
– What is Payment Gateway
The customer selects the good or service they desire to buy before going to the payment page. You have a number of options for your payment page with the majority of payment providers. For your payment page created specifically for your company’s needs, emerchantpay’s payment gateway provides you with the following options:
Web-based payment page –
When clients are prepared to check out, they are led to a hosted payment page, which is a standard payment page. Prior to sending the transaction data to the acquirer, the payment gateway gets it securely. If you don’t collect and/or store cardholder data on your server, a hosted payment page lessens the PCI load for online merchants.
Integration between servers –
A direct integration, also known as a server-to-server integration, allows for communication between the servers of the business and the payment gateway. On the payment screen, a direct transaction can be started by asking the card information.
Without being transferred to the payment gateway’s payment page, customers can complete a card payment, which speeds up the checkout process, improves user experience, and gives the merchant more control over the payment page’s appearance. A server-to-server interface is appropriate if you gather and/or keep the payment information before sending it to the payment gateway for processing.
Encrypting clients’ data –
Client-side encryption, sometimes referred to as encryption-at-source, is the process of encrypting sensitive data on the client-side device prior to transmission to the merchant’s server. The merchant can now make your PCI compliance obligations simpler thanks to this. In a word, it enables you to take payments through your website while encrypting credit card information in your browser with the help of the payment gateway’s encryption library.
The customer fills out the payment page’s credit or debit card information. These specifics include the name of the cardholder, the expiration date, and the CVV code (Card Verification Value). Based on your integration, this information is sent securely to your payment gateway (hosted payment page, server-to-server integration or client-side encryption).
Before sending the card data to the acquiring bank, the payment gateway tokenizes or encrypts the card details and conducts fraud checks.
The acquiring bank securely transmits the data to the card schemes (Visa, MasterCard). Following a further layer of fraud screening, the card schemes pass the payment information to the issuing bank.
Importance of payment gateway – What is Payment Gateway
1. The information about a transaction is transferred between the payment portal and the front-end processor or bank through a payment gateway, which is why it is vital in e-commerce. Since internet shopping involves distance and secrecy, it makes use of specialised encryption and verification technology.
2. The payment gateway offers a standardised payment procedure. The customer is provided with a quick and flexible method of payment. They can pay from any location, using either their PC or mobile device. You may give your consumers a customised experience thanks to the tools and APIs for payment gateways. 5 must known Facts about Online Payment.
Three Different Payment Gateways – What is Payment Gateway
Redirects might offer a PayPal payment option, for instance, when a customer is directed to a PayPal payment page to complete the transaction (i.e., process and pay), that action is known as a “Redirect.”
For the retailer, this has the benefit of being straightforward. With the help of a Redirect gateway, a small business can combine the ease of use and security of a well-known platform like PayPal, but doing so results in less control for the merchant and an additional step for clients.
2. Site-based checkout with off-site payment –
Consider Stripe’s payment gateway: although the front-end checkout will take place on your website, Stripe’s back end handles the payment processing.
This method of managing your payments has various benefits, such as simplicity, similar to redirected payment gateways. However, as in the instance mentioned above, you won’t be able to fully manage the user’s experience through the payment gateway. You will be dependent on the offsite gateway’s performance and peculiarities.
3. Paying on-site.
Large-scale companies frequently use on-site payments that are entirely managed by their own servers. Your system handles both the customer’s payment processing and the checkout. The benefits are now reversed; you’ll have more control but also greater accountability. Every variable matters if you process payments locally.
Since the average cart abandonment rate in retail is over 75%, any enhancements you can make to the shopping experience will have a significant impact on your revenue. For any retailer handling a high volume of sales, this is especially true. Understanding both your alternatives and your duties is crucial when managing your payments on-site.
Features of the best payment gateway – What is Payment Gateway
1. Merchant Dashboard for quick and effective accessibility:
The reconciliation of payments is one of the main sources of frustration for small business owners. You need to be aware of where your payments are coming from and which ones are still waiting at the end of the day. You have total control over the inbound and outbound cash flows, bank accounts, and events for your business thanks to the powerful business dashboard provided by the Paytm Payment Gateway. Furthermore, all on one platform.
This is how Management of transactions manages all of your company’s transactions, request refunds, settle disputes, and get same-day settlements through a single dashboard. In order to make informed business decisions, you may also obtain reports and gain insightful information immediately.
Bank account management: Using the dashboard, you can easily manage and keep up with your account. You can change your bank information, business information, notification preferences, and more with it.
Notifications: The dashboard ensures that you keep informed and are able to take appropriate action when you are on the go by notifying you of every incident.
2. Saved Payment Instruments: For a simple transaction:
The importance of providing users with a top-notch website that utilities the easiest payment methods cannot be overstated. Giving your consumers a bad experience by repeatedly asking them to enter their payment information is especially detrimental if you want them to return for more.
By saving consumers from having to repeatedly enter their payment information, the Saved Instruments feature of the Paytm Payment Gateway improves the checkout experience for your clients. This function enables your clients to keep their payment information for later use, speeding up transactions and boosting success rates.
3. Reach clients in 200+ nations with international payments:
Indian firms frequently experience difficulties when accepting foreign payments. The type of transactions, level of security and trust, speed of settlement, supported currencies, and other factors are frequently used to determine how successfully you can sell internationally.
The Paytm Payment Gateway provides the remedy for these problems by enabling you to accept payments from abroad in all major currencies and open up substantial revenue streams for your company. All of this without the need for API interfaces to expand your business beyond its current limits.
4. Express Payments: Take advantage of the quickest payment processes –
According to a poll, if an online store requires customers to create an account in order to make a purchase, more than 25% of shoppers will abandon their carts.By removing unnecessary steps like forcing customers to submit both billing and shipping information, even when the postal addresses are the same, a solid payment gateway can help shops increase conversions by up to 50%.
By selecting OTP-less and CVV-less payments through a checkbox, the Paytm Payment Gateway enables you to use its Express Payments functionality. With this capability, you may modify the payment methods your clients use and quickly process Visa transactions on your website or mobile app without the requirement for CVV and OTP authentication.
5. Instant Refunds: Make your transactions wait no longer between transactions –
The key to a fantastic customer experience is instant refunds, which have become the new standard. Because collecting refunds through an internet platform takes a lot of time, many customers choose not to use online payment methods. They therefore favor COD as a simpler option. Customers may reasonably expect refunds to be processed as quickly as feasible given the technological breakthroughs the financial sector is making.
According to marketers, if a company’s return procedure isn’t onerous; its sales will increase by about 15%. With the use of the Paytm Payment Gateway, you can offer rapid refunds and zero waiting times, which will improve user experience and brand credibility.
The six options for customers to pay are:
- Wallet Paytm
- Using UPI, a bank account
- Credit and debit cards
- Online banking
- Cards with EMI Options
- Paytm Postpaid
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