Payment gateways do exactly as the name suggests, they act as ‘gateways’ for merchants and consumers to transact a monetary sum in exchange for services/products. There are plenty of payment gateways that promise the world to you, but which one is the best?
How can you select a payment gateway that is safe and convenient? The number of options will confuse you. Hence we declutter payment gateways for you.
In this article, we are going to break down what payment gateways are and the crucial things that you need to know.
Empowered with all this information, you’ll be able to make better-informed decisions and protect your and your customer’s data safe!
What is a payment gateway?
A payment gateway is a bridge between the merchant and the consumer The merchant uses the payment gateway to accept debit, credit, and any other form of electronic payment. Meanwhile, the consumer uses the same gateway to pay the merchant via the methods mentioned earlier.
As the anecdote suggests, a payment gateway acts as a bridge and performs the function of a two-way street. Payment gateway terminals are very popular among brick-and-mortar shops as they allow them to accept a wide variety of payment modes. For example, debit/credit cards or Apple Pay, GooglePay, etc. through innovative technologies like Near Field Communication (NFC).
What Makes A Payment Gateway Work?
A payment gateway processes the monetary transactions between retail merchants and their customers in both online and offline domains.
A payment gateway secures and encrypts sensitive information like your credit card information. It guarantees that data is transacted securely between the user and merchant. Here is a stage-by-stage breakdown of how the gateway works:
Stage 1: A client either puts in a request on the web or finishes an exchange at a trader’s actual store or eatery.
Stage 2: The payment gateway at that point safely moves the transactional data to the procuring bank.
Stage 3: The payment gateway figures out which credit card service provider (Visa, Mastercard, American Express, and so forth) is being used.
Stage 4: The payment gateway directs the transactional data (banking credentials, the exchange sum, and so forth) to the right payment switch.
Stage 5: The payment switch receives that data, it sends the transactional request to the issuing bank and the transactional information to the credit card network.
Stage 6: Once the issuing bank receives the transactional request, it cycles through all the anti-fraud & detection procedures to confirm the authenticity of the transaction. It is also during the same time when they determine if the consumer has enough monetary release to execute the transaction.
Stage 7: The responsible bank either affirms or declines the exchange and sends that data back through the credit card network to the issuing bank and payment gateway.
How Does A Payment Gateway Maintain Platform Security?
Payment gateways follow multiple different standards of safety and security standards. By adhering to these standards, these gateways are able to keep their customer’s data secure while processing transactions. Here are the two basic security standards that all good payment gateways must follow:
All payment gateways must use a strong form of encryption. This done to protect the data that is transacted on their platform. One way they do that is by using Secure Sockets Layer or better known as SSL. This form of encryption protects the sensitive banking information of users that makes it difficult for hackers to intrude and steal any meaningful information that might hold any value.
#2 PCI Compliance
PCI compliance is a series of industry standards. That is created by the Payment Card Industry Data Security Standard (PCI DSS). This was done to ensure that all companies and payment gateway service providers create and maintain a level-playing environment of highly secure platforms. The enforcement of this security standard has enabled the transmission of sensitive banking information over the web safe and secure.
Payment Gateways: An essential need for modern businesses!
Payment gateways have become essential for businesses and not using one can seriously put you behind your competition. Nonetheless, don’t let the fear of missing out lead you into a partnership with a bad payment gateway service provider. Ergo, you must always perform your due diligence before you partner with any given payment gateway service provider!