In a world where businesses are claiming global markets and aiming to capture them, compliance with consumer behaviour is crucial. However, changing boundaries have also caused changes in purchasing behaviour. Businesses must, therefore, be flexible to remain competitive.
What Is A Payment Gateway?
A payment gateway (PG) is a channel that connects your bank account with the platform where you want to send money. However, in essence, it is a software that helps you conduct online transactions through different methods such as net banking, credit card, debit card, UPI, or one of the many online wallets available nowadays. Furthermore, as a third party, a payment gateway is also responsible for securely transferring your money from your bank account to the payment portal of the merchant.
How A Payment Gateway Works
In most cases, a payment gateway encrypts the sensitive information given by the user throughout the process. Encryption ensures security by encrypting the information that the user provides, including credit and debit card information.
In that regard, the following steps illustrate the basic steps of using a payment gateway:
- Step 01: On the website, the customer places the order and then presses the checkout button or its equivalent.
- Step 02: The website or e-commerce platform at this point directs the customer to a payment gateway, where the customer enters all the necessary information about the bank or card to be used for the purchase. Once the user agrees to the transaction, the payment gateway performs a direct link to the issuing bank’s page or a 3D secure page.
- Step 03: As soon as the payment gateway receives approval for the transaction, the bank checks if the customer has enough funds in the account to complete the transaction.
- Step 04: In response, the payment gateway sends a message to the merchant. When the merchant receives a “NO” response from the bank, an error message is sent to the customer, explaining the problem with the account or credit card. Similarly, upon receiving a “Yes” from the bank portal, the merchant requests the transaction from the bank.
- Step 05: The bank settles the money with the payment gateway, thereafter settling the money with the merchant. Followed by the completion of this process, a confirmation message is sent to the customer.
Additionally, it should be emphasized that the transfer of money entails sensitive information about a person’s bank and credit card details that are entirely personal to them. As such, it is essential to protect this sensitive information.
To Conclude
Investing in a payment gateway that is tailored to your needs can be a valuable tool for your business. Once the point of sale (POS) and payment processing functions can be combined into a single integrated system, you can then provide it to merchants in place of their current payment gateway.
When merchants switch providers, they must select a payment gateway provider, which is secure to reduce the risk of chargebacks and have more options when creating settlement accounts. It should also provide competitive fees, faster settlement, excellent customer support, and high-quality reporting.
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