These days making online payments may seem as simple as switching on a fan. Put aside exaggeration but we can definitely say it is very easy and quick. Have you ever wondered what makes an online payment safe, simple, and secure? It is the payment gateway that plays a wonderful role in making online payments secure and quick.
Payment Gateway
What is a Payment Gateway?
A payment gateway is a mechanism through which payment data of the customer making an online payment is sent to the acquirer. In simple words, it is the middleman who facilitates the transfer of payment from the customer’s bank to the merchant’s bank account.
Parties Involved
Merchant — any online business such as e-commerce, gaming, forex, travel, and retail.
Customer — a customer is the one who purchases from the online store by entering his or her card information.
Issuing bank — it is the bank of a customer or a cardholder that issues a cardholder debit or credit card that is used to make a purchase.
Acquirer — it is the bank of the online business or the merchant whose products the customer wants to buy.
Roles and Responsibilities
Let’s know how a payment gateway processes online payments in detail.
In order to ensure that the payment is made securely, a payment gateway sends cardholder payment information to the acquirer and then informs whether the payment is accepted or declined, to the cardholder. Firstly, a payment gateway ensures that there are funds available at the issuing bank and then successfully transfers the payment amount to the acquirer. Sensitive card details and other payment-related information is shared securely with the merchant.
Need or Importance of a Payment Gateway
One obvious question that would pop up is why do we need it anyway? The answer to this question is very simple; a payment gateway is needed to ensure that online payments are free of fraud and chargeback. This can be done by guarding sensitive payment information using payment gateway software. Think of a scenario where there is no POS or in other words when payment is made without the presence of a card. How can you be sure that the payment made will be authentic and that the buyer is using his card only? Such payments are susceptible to a high risk of fraud. Therefore, using a payment gateway will do away with all the risks by providing a secure and reliable mechanism of online payment.
Payment Gateway Page Options
Hosted payment page — a page where customers are redirected when they are ready to checkout. The payment gateway receives the check-out information before sending it to the merchant
Server-to-server integration — it is also known as direct integration between the two servers: the merchant’s server and payment gateway’s server. It allows the customer to remain on the system during the checkout process while processing the transactions through a gateway in the background.
Client-side encryption — it means that the sensitive information is encrypted on the client’s side before sending it to the merchant.