Any business owner’s dream is to provide their customers with an outstanding shopping experience!
While customer service and product quality are critical, no commercial platform can thrive without adequate payment security mechanisms.
A payment gateway is vital to running your store’s transactions and keeping them safe! So here’s what is a payment gateway and how it works.
What is a Payment Gateway
Transferring money from one place to another requires a payment gateway, which acts as a conduit. An online transaction can be made using many payment methods such as net banking, credit card, debit card, UPI, or any of the many online wallets available today.
Your bank’s payment portal uses a payment gateway to securely transmit funds from your bank account to the merchant’s.
How Does a Payment Gateway Work
The payment procedure begins when consumers have their selected items in their shopping basket and are ready to check out. A lot happens in the background, even though the money transaction is completed in a matter of seconds:
The system records a new payment order in the system upon checkout. To complete the transaction, the consumer must fill out and submit a credit card form. PCI DSS-compliant encryption encrypts, stores, and transmits this data to the merchant’s acquiring institution or bank.
2. Acquiring Company to a Processing Facility
The bank’s payment network handles the encrypted data before sending it to the processing center.
3. Acceptance or Rejection
Once the payment has been authorized, the processing center verifies with the credit card issuer to ensure all is well. The payment gateway then receives a response indicating whether or not the transaction has been approved.
4. Approval of the Transaction
To let the customer know that the transaction was successful, the payment gateway sends a confirmation message to the merchant’s website as soon as the credit card company gives its final approval (or rejected, it depends on the case).
5. Notifying the Merchant
Once your payment transaction is completed, the payment gateway notifies the merchant.
6. Payments are Settled
Payment is settled with the merchant through the payment gateway.