Payment gateways are complex platforms designed to offer a checkout experience that’s fast, effective, secure, and seamless. It helps easily carry out transactions with customers irrespective of the location or device they are on. By securely transmitting data between various parties; a payment gateway process ensures zero errors and glitches when the said information is shared and transfer of funds is initiated by banking institutions and card networks.
Here’s a short breakdown of how the entire system works:
- It first captures the credit card information shared by the customer
- Once received, this information is encrypted
- The encrypted transaction information is shared with the credit card processor
- The ensuing transaction is either approved or declined and shared back with the payment gateway
- Using this information funds are either credited to the merchant account or the customer is made aware of the declined status, whichsoever applies in that case
In the entire process, the customer never directly interacts with the payment gateway, only the data shared by the customer via the shopping cart and secure connection is shared with the system.
How Secure is a Payment Gateway?
The short answer would be— ‘It’s Highly Secure’. A payment gateway process is designed to work with almost every website and virtual shopping card to help streamline the entire process of online processing of transactions via a variety of payment modes, such as credit/debit cards, UPI, digital wallets, net banking, etc.
Allowing a customer to choose his preferred payment mode to carry out transactions for the goods and services they are interested in.
Once a customer a chosen the product or service, all information including the cost of the product/service, applicable taxes, and shipping costs are totaled and shared with the customer. After which, the customer is required to share billing and shipping information.
All of the sensitive information including the credit card number, CVV, and CVV2, etc. are encrypted to eliminate the possibility of fraud. Security is a critical component of a payment gateway system, and they function under strict codes and procedures set by banking and card associations which need to be followed to the core.
These rules and security standards fall under PCI DSS, also known as Payment Card Industry- Data Security Standard developed specifically to ensure the highest levels of security for both the customer and online business.
Moreover, a payment gateway system functions under the HTTPS protocol, which is a complex security algorithm responsible for securing the exchange of information between various parties while a transaction is in process.
A payment gateway service provider needs to go through an extensive process before getting approvals to communicate with payment processors making it a highly secure payment platforms.
How Does a Payment Gateway System Work?
Let’s elaborate a little on the points that we shared at the beginning of this piece!
Placing an Order
The customer places an order by hitting the ‘Buy’ button on the website and entering the card details on the checkout page.
Information is Encrypted and Shared with the Merchant Site
The information shared by the customer on the merchant website is encrypted by the browser and shared with the merchant’s web server. This is usually done by the SSL or Secure Socket Technology.
Forwarding of Information from Merchant Site to the Payment Gateway
This is done using SSL technology to encrypt the connection from the merchant’s server to the payment server hosted by the payment gateway.
Sharing of Transaction Information with Payment Processor
All transaction-related information is shared with the payment processor used by the merchant’s acquiring bank.
Transaction Information is Routed to Card Networks
Since the card network which issues the card also acts just like the issuing bank, it provides either an approval or decline response and shares that information with the payment gateway.
Authorization Request is Shared with the Card Association
The card authorization network verifies the transaction request and generates a response to be shared back with the processor. Depending on the verification process, the transaction is either approved or declined and in the case of the latter, the reason is also shared back.
Payment Processor forwards this information to the Payment Gateway
It’s self-explanatory. The information received by the payment processor is routed to the payment gateway.
The Resulting Information is Shared with the Merchant Site
This process called ‘Authorization’ usually takes about 2-3 seconds, and the merchant needs to fulfill the order, and the same process is repeated all over.
Settlement of Funds
Once the merchant has fulfilled the order, all of the day’s transactions are clubbed together and sent to the acquiring bank of the merchant as a single batch for settlement of funds.
All Transactions are Recorded for Safekeeping
All of this process is recorded every time a transaction is initiated so that merchants can get a bird’s eye view of the payment gateway reporting facilities.
Now that you are aware of the inner workings of a payment gateway, you might want to know the right way to choose a payment gateway service provider.
So, if you are a business owner and thinking of setting up the best payment gateway for your online business, here are a few pointers that should help you get up to speed.
- Multi–currency acceptance
- PCI Compliance
- Mobile Optimization and SDK
- Flexible Integrations
- Faster Checkout
- Fastest Setup Time
- Support Different Kinds of Payments
- Safe and Secure and more.
A payment gateway system like plural payment gateway is your doorway to reach a higher number of consumers from all over the world. Moreover, it allows you to scale your business to greater heights simply by reaching out to this untapped buyer base.
Today’s consumers want convenience and a faster checkout experience, and the only way to ensure that you are at the top of your game is to integrate a reputed payment gateway system on your website!
