Payment Gateways – Benefits, Process, How payment gateways work? – Must Adopt Tool for Every Business. Internet has massive potential and can provide endless opportunities, payment gateways is the poster child of such opportunities. Customers can now pay for services in matter of minutes. One click and the payment is made. With large number of business going online and doing business payment gateways have become massive and are enormously providing payment solutions to business. Any website can join a payment gateway to ensure payments are made without any hassle. All payments happen in a matter of seconds and are end to end encrypted i.e. they are safe.
Payment Gateways – Must Adopt Tool for Every Business
How payment gateways work?
Payment Gateways are servers and software that transfer transaction information from issuing bank to acquiring banks.
A payment gateway creates an assembly between a bank and a web portal to ensure smooth transfer of funds i.e. payment gateways act as a server that link websites and banks to ensure online transactions can be finished in real-time. They enable communication among banks.
Payment gateways provide a way to securely validate the credit card credentials of a customer via the card issuer and provide a safe bridge for funds transfer between the customer, vendor and card issuer. The payment gateway at the end of the day sends all the transaction details to banks to settle the transactions.
Payment gateways help approval and decline of payments and guarantee payments, fund transfer from customer to business and vice versa for online and offline businesses. The gateway takes credit card information, encodes information, channel it to processor of credit card and circles back to approve or reject the transaction.
Payment gateways are different than merchant accounts, however Payment Gateway can also act as a Payment Service Providers (or PSPs) and behave both like a merchant account and payment gateway. Payment gateways also provide tools to guard against fraudulent activities.
The payment gateways also ensure the prevention of fraud by inducing verification codes like CCV or CVV to make sure the payments are legitimate.
Payment gateways process a payment via four steps:
- The payment gateway is interlinked with the payment page of website that a customer want to buy from. When a customer enter their credit card information into the payment page it goes directly to payment gateway.
- The payment gateway then process the information and send it to the underlying bank. This is all end to end encrypted.
- After the approval from bank, sale is made and the company or website can then deliver the product or services.
- The approval of funds transfer is validated by bank and the money usually flows from customer’s bank account to web portal’s bank account.
Payment Gateways Benefits:
Any vendor by linking payment gateway to their web portal can provide superior services to customers, also providing a safe way for customers to pay gateways help ease the process of buying.
One of the biggest advantage of using a payment gateway is that customers do not get to leave the website to process payments, redirecting the consumer to a different page breeds mistrust.
Payment gateways ensure real time payment, which means the customer or the web portal get paid immediately or even get immediate feedback if the payment is not approved by the bank. This save a lot of time.
Payment gateways reduce administration of payments or continuous follow ups to receive payments from customers. A payment gateway removes the need for manual card processing or third party account consolidation.
Payment gateway is a great innovation, it has helped solve massive problems in the western world and is now solving even greater problems for businesses and customers in emerging economies. From PAYPAL to new payment gateways, the technology has improved and thrived. The problems faced by earlier gateways was immense however technological advancement has mitigated those problems, similarly problems faced now by payment banks can be mitigated in years to come.