What Is A Payment Gateway?

When online selling or e-commerce is involved, online payment and the channel through which you make your payments are called payment gateways. In addition, online businesses are booming these days. According to the stats, the industry will keep rising in the next few years. COVID 19 has changed the scenario of living, and now people are showing more interest in buying online than six months before. Look around you how many of us preferred online grocery over going to market and buy some stuff.

According to Juniper Research online Payment Fraud to Cost Ecommerce At Least $25 Billion Annually by 2024

With this out of the way, let’s go over payment gateway and the importance of it.

Definition of Payment Gateway

It is an online tunnel of payment. It is a service that authorizes and facilitates the process of payments.Through credit/debit card or other means of payment. A payment gateway system provides facility to digital transactions. By encrypting sensitive information and transferring between a payment portal (mobile device or website) and front/bank end processor.

In simple words, an online payment gateway is like a middleman between seller and buyer.In which it ensures the transaction is faster and secure. An online payment gateway system is indeed very beneficial for digital world economics. It keeps the payment system rolling without hindrances, and people can buy and sell with convenience.

Online payments are part of our daily lives. We make transactions in different ways, including debit cards and credit cards, net banking, wallets, UPI, etc.

Essential Elements Of Payment Gateway

You don’t need to be an expert in order to facilitate your customers. Basic knowledge of how it works and what it involves is ok for you. If you want to know how it works first, the first thing that you need to know is the key players involved in online payments.

Seller or merchant

A person runs an online business, including e-commerce, Forex trading, travels, or any other retail.

Buyer or the cardholder

He is the person who wants to have access to online products and make a purchase from them in the comfort of his home. To complete this process, he needs to pay through the online system.

Issuing Bank

It is a place where buyers hold their accounts, and from the bank, they will pay to the merchant.

Acquirer

It is the bank of merchant or seller where the payment from the issuing bank will settle down.

How does an online payment Gateway works

The payment gateway provider will facilitate the buyer and seller’s transactions through the issuing bank toward the acquirer safely and promptly. It primary focus is to secure the user’s sensitive information during transactions. A payment gateway will ensure security by encrypting data of relevant banks and cards given by the user.

These are the necessary steps that show how it typically work in the online transaction process.

Check-out

A customer visits the website and selects the product; then, he/she press the check-out button to complete the order.

Redirect to payment gateway

Once customers filled the necessary details after clicking the check-out button, the website or e-commerce platform will redirect the customers to the check-out window. At this point, customers will enter the required information, including bank details. It will take the buyer to the issuing bank page then ask for the transaction approval.

Checking the credentials

Once the payment gateway processed the payment, it’s time to look into the seller account. As a result, it ensure that the account holder has sufficient balance to make the payment process successful.

Confirmation of Order

The payment gateway will send a Yes or No message to the merchant accordingly. And if everything is okay from the bank side, the merchant will confirm the order. The bank will settle the amount, and the customer will get a confirmation message for the order.

How Online Payment Gateway Keeps Your Info Safe?

Online Payment gateway safety

In this process, the payment provider keeps your information safe. Let’s learn more about it.

  • The whole transaction is carried through HTTPS, not HTTP, which means the process is safe and secure.
  • Due to the hash function, the provider uses a signed request from the seller side to validate the process. The signed request is generally a secret code. The secret code is only known to the seller and payment gateway.
  • To ensure that there is no spam or junk involved, the requesting server’s IP is verified. And if there is any malicious activity found, the site does not allow for processing ahead.
  • Virtual Payer Authentication (VPA) actively works during all this process. It makes sure that acquirers, issues, and payment provider are secure and safe during transactions. VPA involves 3-D secure protocols and an additional layer of security. The whole process helps the buyer and seller to authenticate the process efficiently and promptly.

Payment Gateways For E-Commerce:

First If you are running an e-commerce business, you might want some most reliable payment providers for your business to run smoothly. Choose payment providers that suit your needs best. Here are a few popular online payment gateways:

Benefits of Payment Gateway

An online payment gateway is crucial for all e-commerce platforms globally to protect online transactions. Here are a few benefits of online payment gateway:

Secure Transactions

There was a time when online payment was vulnerable to hackers and scammers. But nowadays, payment providers facilitate safe and secure transactions. Payment providers utilize standard encryption and protect sensitive data that help both merchants and consumers from scams and fraud.

Faster Transactions

A payment provider is much faster than manual processing, and customers can purchase without any trouble. Customers always prefer fast systems, and a fast online transaction can help you build loyal customers.

Fraud detection

Many online payment gateways offer fraud detection tools to reduce the risk of losing sensitive information.

24/7 service

Customer service is another worth mentioning feature of online transactions—most of the reliable payment providers customer service 24 hours a day and seven days a week.

Business expansion

When people can access your store from any part of the world, it will eventually take your business to the next level.

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Conclusion

Hence, a payment provider ensures secure payments and lets you expand your business on safe and secure foundations. It allows thousands of users to use the service at the same time. If you are running an online business, choose a reliable payment provider to protect yourself and your customers from fraud transactions. We hope this article will help you understand the importance of having a safe payment gateway.

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