Payment Gateway

byE-Commerce and Digital Marketing •2:58 PM

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What is payment gateway?

Now days online payments become a vital part of our daily lives. We are not only transacting electronically via debit or credit cards but also through various other modes such as UPI, net-banking and wallets.
"You need both a payment gateway (to accept the payment details and connect to the payment networks) and a merchant account (to receive the funds) to make credit or debit card payments via your website."
Online payment is an essential feature offered by every e-commerce platform in the world.
Online payments are simple, easy and convenient. They allow you to buy products and services from all over the world.
If you are a seller, you can sell anything using internet connection to anyone in the world. You don't even need a device for your customer; a smartphone is appropriate.

Let’s find out.

An online payment gateway (PG) is a vital path that connects your bank account to the platform where you need to transfer your money.
A PG is a program/software that allows you to make an online transaction by various payment methods, such as net banking, credit card, debit card, UPI, or the many online wallets available these days.
A PG plays the role of a third party that securely transfers your money from your bank account to the merchant’s payment portal.
To explain this in simpler terms, at the time of buying a product from a popular digital platform like Flipkart, when you make the payment for the product, a payment gateway helps you in the process by transferring your money from your bank account or wallet to Flipkart.

A payment gateway is focused on securing the user's sensitive information throughout the process.
It ensures security by encrypting the user's providing data such as card and bank details using different-2 encryption techniques.
The following are the basic steps showing how a typical payment gateway works.

Step 1:

A customer places his / her order on the website and then clicks the Send or Checkout button, or its corresponding button.

Step 2:

Once this occurs, the customer is brought to a payment gateway by the website or e-commerce platform where he/she enters all relevant information about the bank or the card they are using to pay.
The PG then takes the user directly to the page of the issuing bank or a 3D secure payment gateway page, asking for the transaction to be authorized.

Step 3:

Once the payment gateway gets the transaction approval, the bank then checks whether the customer has enough balance in the account to make this transaction a success or not.

Step 4:

The payment gateway sends a message to the merchant. If the reply from the bank is a “No’”, then the merchant sends an error message to the customer, telling them about the issue with the card or the bank account.
If the response is a “Yes” from the bank portal, then the merchant can go forward for the transaction.

Step 5:

The bank settles the money with the portal to the sale, which in effect settles the money with the dealer.
Once this process is completed, the customer gets a confirmation message of the order being placed.
The money transaction includes sensitive information about the bank and card details of an individual which are entirely personal to him / her. Hence, ensuring that this information remains safe is crucial.

A payment gateway ensures the security of the information you put in. Here is a list of things that a PG does to keep your data safe.

First the entire trade is conducted via an HTTPS web address. This is different from the HTTP, since the S stands for Safe in the HTTPS. The transaction is done in the same way.
Because of the hash function the system often uses the merchant's signed request to validate the transaction request. This signed request is a secret word that only the merchant knows and the gateway to payment.
The requesting server's IP is checked for detecting any malicious activity to protect the payment page result of the process.
Virtual Payer Authentication (VPA) is something that acquirers, issuers and gateways of payment help to further protect the transaction. VPA, introduced under the 3-D protected protocol, adds an additional security layer and lets online buyers and sellers quickly authenticate one another.

A PG can allow a merchant to give the user get a better experience.
You can save your bank or card details on their site or app, and the gateway will keep it safe from any threat to cyber security.
Some payment gateways allow you to make digital transactions through mobile wallet apps.
You can bring in your money from the account balance to the mobile wallet app and then further use it to make payments on other apps or websites.
Many fraud screening tools tools like Card Code Value (CCV), Card Verification Value (CVV) or even the Address Verification Service (AVS). These tools ensure that there is no fraudulent transaction.
A payment gateway focuses on creating a safe channel between a customer and the retailer to safely facilitate payments.
It involves the authentication of both parties from the banks involved.
A payment gateway's most important advantage is that it allows millions of users to use it at the same time, allowing you to buy or sell goods and services whenever you want.