"Payment Gateways: Everything You Need to Know"- Very Informative Article Shared By Assist Prof Amandeep Singh

 Payment Gateways: Everything You Need to Know

Blog - Prof. Amandeep Singh

Lyallpur khalsa college, Kapurthala

What is a Payment Gateway?

A payment gateway is an e-commerce application service provider's merchant service that authorizes

credit card or direct payment processing for e-businesses, online sellers, bricks and clicks, or traditional

brick-and-shops.

Why is a payment gateway required?

Any business that wants to accept online and credit card payments needs a payment gateway. It

encrypts sensitive credit card information and ensures that it is securely transmitted from the customer

to the acquiring bank. The payment gateway acts as a bridge between your customer and the merchant,

ensuring that the transaction is completed safely and quickly. The technology sends financial data to the

appropriate parties to authorize payments and transfer funds from a customer to a merchant.

The payment gateway that you choose imparts trust in the minds of your customers as they make the

purchase, hence it becomes the responsibility of a merchant to select the payment gateway such that it

is safe and secure.

How does it work?

These key stakeholders are included in payment gateways:

 Merchant - The business

 Customer - the person making the purchase.

 Issuing Bank - The customer's account is held by this financial institution.

 Card Schemes - The Credit Card Company viz. Visa, MasterCard, Discover, etc.

 Acquiring - The merchant's account is held by this financial institution.

Steps:-

 The cardholder initiates the purchase and pays by clicking on the “Pay Now” button on the

merchant’s website.

 The payment gateway comes into action and checks with the issuing bank if funds are available

and make sure that the transaction amount doesn’t exceed the credit card limit or account

balance.

 The payment gateway after verification sends encrypted credentials to the card schemes to

process.

 The card scheme approves and sends information back to the merchant's website to complete

the transaction.

 The payment gateway then sends the information to the acquiring bank to move money from

the issuing bank which is where the customer holds his account to the merchant’s account.

 The customer will receive an order confirmation message once this process is completed.

 Although these are several steps, in reality, it takes place within seconds. Radiant Pay provides

payment gateway solutions in UK for businesses to accept payment seamlessly.

Types of Payment Gateways

Redirected - The payment gateway simply redirects the customer to a payment processor such as PayPal

or Stripe to complete the transaction.

Hosted - Aka off-site payment. When a customer purchases something on your website or in your store,

the payment information is sent to the payment provider's servers for processing.

Self-hosted - Your servers handle the entire transaction. Aka on-sit payment.

How Important is a Payment Gateway in eCommerce?

A payment gateway is useful for more than just transferring money. A Payment Gateway can help a

merchant provide a better user experience. A payment gateway focuses on establishing a secure

connection between a customer and a merchant to facilitate payments. Both parties from the banks

involved must authenticate themselves.

PCI-DSS - Because of PCI-DSS compliance, user can store their data in the portal or gateway for recurring

payments. For example, if you order frequently from Amazon, the app or site will save your card or bank

account information for future use, and the payment gateway will keep it safe from any cyber-attacks

White-Label Wallet - You can make digital transactions through mobile wallet apps with some payment

gateways. Digital transactions via mobile wallet apps are possible with some payment gateways. You can

transfer money from your account balance to your mobile wallet app, which you can then use to make

purchases on other apps or websites.

Fraud Screening tools - To reduce the risk of losing information, many payment gateways offer fraud

screening tools. The Card Code Value (CCV), Card Verification Value (CVV), and even the Address

Verification Service are examples of these tools (AVS). These tools ensure that no transactions are

fraudulent.

The most significant benefit of a payment gateway is that it can be used by millions of people at the

same time, allowing you to buy and sell goods and services whenever you want.

What to Look for When Choosing a Payment Gateway

When merchants are looking for an appropriate and leading payment gateway, they must understand

why they are choosing the payment gateway and what services the payment gateway provider provides.

The success of your online business is frequently determined by your choice of a reasonable payment

gateway.

The factors that really should be considered before choosing an e-commerce payment gateway

provider, based on the business and functional requirements for the eCommerce business, are

enumerated below:

 Hire an Expert

A payment gateway is a must when it comes to selling products and services online. It allows the

customers to make payments on their purchases and helps merchants to accept payments hassle-free.

To integrate it with the website, merchants should hire an expert to do the job.

 Make customers feel safe

Even though you are a small-scale business, the customer expects a high-quality website with a secure

payment gateway. Before selecting one, the merchant should verify if it is according to the security

standards and is certified with the same.

 Fees and services agreement requirement

Pricing for the payment gateways depends on various factors such as the type of transaction business

demands (online or in-person), number of transactions, sales, or even the market which it serves.

 Make check out easy from all devices

After analyzing the record over years it can be concluded that the population uses mobile devices to

make purchases online, and this trend is going upwards. It is needed to evaluate the options and provide

a flexible checkout experience that caters to various mobile devices and network types.

 Multiple options to choose from

The website’s efficiency is largely affected by the payment gateways, we have to make sure that the

chosen one supports all payment types, electronic invoicing, chargeback management, text and email

reminders to the customers, etc. Depending upon the business need the payment gateway comes to the

table with several features to offer. If a business has a global market that is if the products and services

are sold all over the world then the payment gateway must accept several credit and debit cards,

provide global solutions, and accept payment in different currencies

 Merchant Account

When customers make an online payment through a payment gateway, the money is temporarily

transferred to a separate retailer account, which is called a merchant account. This is not the same as

having a bank account. It is essential to have a merchant account to accept payment online. Merchant

accounts provide an extra layer of security and funds management for both sellers and buyers, despite

the fact that they appear to be an extra task.

 Mobile Payments

The is a rise in the use of digital mobile wallets, Google Pay, Samsung Pay, etc, and are being well

supported by payment gateways. Mobile payments might replace credit card payments in the coming

years. It is our responsibility to check that the payment gateway you select is optimized for mobile