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Unit-4.4-Payment Gateways

A payment gateway is a software application that acts as an intermediary between an ecommerce website and a bank to authorize credit card, debit card, and other online payments. It encrypts payment information and sends it to the credit card processor, who routes it to the appropriate credit card network for authorization. If authorized, the payment gateway notifies the merchant and funds are transferred, though it may take up to 48 hours to appear in the merchant's account. Payment gateways provide additional features like payment storage, recurring billing, virtual terminals, and API tools to help merchants accept online payments securely.

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Shivam Singh
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622 views8 pages

Unit-4.4-Payment Gateways

A payment gateway is a software application that acts as an intermediary between an ecommerce website and a bank to authorize credit card, debit card, and other online payments. It encrypts payment information and sends it to the credit card processor, who routes it to the appropriate credit card network for authorization. If authorized, the payment gateway notifies the merchant and funds are transferred, though it may take up to 48 hours to appear in the merchant's account. Payment gateways provide additional features like payment storage, recurring billing, virtual terminals, and API tools to help merchants accept online payments securely.

Uploaded by

Shivam Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Payment Gateways

What Is a Payment Gateway?


• “A payment gateway is the service that sends all of your credit card
transactions to your credit card processors,”

• “It also sends you a message from your credit card processor that lets
you know a transaction has been authorized. There are even some
payment gateways that will automatically add tax and screen for fraud.”

• In other words, a payment gateway is simply a software application. It’s


basically a conduit between an eCommerce website and the bank that
authorizes (or declines) a customer’s credit card payment.

• Credit and debit cards, eCheck , and even cryptocurrencies like bitcoin
are all processed through payment gateways.
What is the Role of a Payment Gateway?
• Payment gateway services are required for all online credit card
processing. It’s the same exact process as a point of service (POS) device
does when you pay for your lunch at restaurant.

• The Payment gateways works with your purchase items from a brick and
mortar retailer. So, the main role of a payment gateway is to authorize
transactions between you and your customers.

• Remember, without a payment gateway approving the transaction


process cannot go move forward and you won’t receive your money.
How Do Payment Gateways Work?
The gateway process follows these six steps.
Step 1: The customer places an order and enters their payment information.
An online the transaction will be processed as a “card-not-present”
transaction. Again, this may result in a higher processing rate. Once this info
has been submitted, it’s encrypted, and then sent on it’s way.
Step 2: The encrypted data is first sent to the merchant’s processor, which is
simply the company that actually processes the transaction.
Step 3: The processor routes the transaction data to the credit card
association. Visa, MasterCard, Discover, or American Express are credit card
associations. These card associations charge an interchange fee for each
transaction.
Step 4: The next step is where the transaction is approved or denied. The card
will obviously need to be valid and have enough funds.
Also in the fourth step the authorized user must also not have any holds or
freezes and the transaction will be authorized. What’s amazing is that these
first four steps take place in a matter of seconds!
Step 5: The transaction becomes authorized. The issuing bank then transmits
the authorization back to the parties in the payment processing network.
The authorization starts with the credit card association, then with the
merchant’s business. Finally, back to the ecommerce site through the
payment gateway.
Step 6: Although the transaction only takes seconds, it can take between 24
to 48 hours for the funds to be available in your account.
Additional Payment Gateway Features
In addition to accepting online payments, payment gateways are also
capable of helping you with the following:
• Payment Information Storage
Storing payment information so that the customer doesn’t have to
constantly re-renter their information. This information is encrypted so it
ensure’s that the information is securely stored.
• Encryption
All payment gateways encrypt sensitive payment information prior to
them transmitting it to the processing bank.
• Recurring Billing
Subscription- based pricing is becoming increasingly popular payment
gateway. The subscription offers a recurring billing feature so that you can
automate this process.
• Virtual Terminal
A virtual terminal is a browser-based version of a physical credit card
terminal. This terminal allows you to input a customer’s credit card
information.
The virtual terminal will then process the transaction directly through your
computer’s web browser. It is even possible to use a mobile device
through an online web form. Processing rates will always drop when the
card is present.
• PCI Compliance
Payment gateways must be PCIcompliantsPCI compliant so that you can
accept payments securely, while avoiding costly fines.
• API Tools and Developer Information
On the technical-side, most payment gateways give you the ability to
customize it to fit your specific needs.
• Integration
Payment gateways generally integrate with other tools, such as your
accounting software like Quick books. You can also use your online
shopping carts like Shopify.

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