The recent growth of online payments demonstrates the importance of payment gateways for your business. Payment gateways are services that process credit card transactions for your company. They benefit your company by ensuring safe and smooth transactions and reducing losses associated with late payments. The recent growth of online payments demonstrates the importance of payment gateways for your business. Payment gateways are services that process credit card transactions for your company. They benefit your company by ensuring safe and smooth transactions and reducing losses associated with late payments. This article will explain what a payment gateway is, why they're popular, how online payments work with them, and whether or not you need one.
What exactly is a payment gateway?
A payment gateway is a network that allows your customers to transfer funds to you. Payment gateways are very similar to the point-of-sale terminals found in most physical stores. Customers and businesses must collaborate to complete a transaction when using a payment gateway.
After your customer places an order, the payment gateway verifies the customer's credit card information and determines whether they have enough funds in their account to pay you.
Why do you need to have a payment gateway?
When you integrate with a payment gateway, your customers can make purchases whenever they want, whether you're in the store or not. Allowing your customers to shop at their leisure benefits both them and you.
As a business owner, you understand how difficult it is to get paid at all. Instead of going through the hassle of agreeing to pay on a certain day and then forgetting to do so, many customers prefer to pay right away and be done with it. Payment gateways enable them to do so, creating a win-win situation for you and your customers.
Customers' top concern when making online payments is security. In 2017, the total loss from credit card fraud in the United States was $2.5 billion. Payment gateways significantly reduce the risk of credit card fraud. The payment gateway receives the customer's credit card information in a secure manner. This means that only the customer and their issuing bank will have access to their data.
How do online payments work in conjunction with a payment gateway?
Before we get started, here are some terms you should be familiar with:
A merchant account is a separate bank account for receivables used by businesses. During a transaction, your customer's payment is initially transferred to your merchant account, where it remains until you transfer it to your company's main bank account. Accepting online payments necessitates the use of both a payment gateway and a merchant account.
A payment processor is a service that authorizes the customer's card details to ensure that they have enough funds in their account to pay when a business charges a customer for a purchase. If they do, the payment processor authorizes the transaction and the funds are transferred to the business' account; otherwise, the transaction is rejected.
The following steps describe how online payments work with a payment gateway:
Step 1: To begin accepting online payments, set up your website and connect it to a payment gateway.
Step 2: Your customer purchases something from your website by clicking your payment link and entering their credit or debit card information.
Step 3: The payment gateway receives the order and card information. The card information is securely transmitted to the payment gateway, ensuring that only your customer and their bank have access to their card information.
Step 4: Following that, the payment gateway verifies your customer's card information and determines whether they have sufficient funds to make the payment. If they do, the payment gateway will complete the transaction. Furthermore, the payment gateway uses anti-fraud tools to prevent fraudulent activities.
Step 5: The payment gateway then takes over and initiates the transaction by sending a request to the customer's issuing bank. The funds are then transferred from the issuing bank to the merchant bank, which deposits them into the merchant account.
Step 6: The merchant will receive a notification of the transaction's status. The length of time it takes to receive your payment is determined by the payment gateway you use. The majority of payments are received in real-time, almost immediately after the transaction is completed, but some may take up to 21 days if there are any processing errors.
How to integrate with a payment gateway?
- The first type of integration takes your customer away from your company's website to pay. This is appropriate for businesses with little online traffic. When your customer clicks on the payment link, they are directed to your payment processor's page where they can enter their credit card information and make the payment before being redirected to your website.
- With the following category, your customer remains on your website throughout the payment process, and the payment is handled by a payment gateway. When a customer enters their information on your company's website, the information is sent to the payment gateway's URL, where the transaction takes place. This type of payment gateway is better for businesses that receive the majority of their revenue through online payments because it provides a better customer experience because your customer remains on your website throughout the purchase and is not redirected. However, because you will be collecting your customers' payment information through your own website, you must take the necessary precautions to ensure their information is secure.
- The following payment gateway makes use of an API (Application Programming Interface). This type is similar to the previous one in that customers enter their credit card information directly into the company's online payment page, but their payment is processed using an API. These payment gateways can be personalized with your company's name and logo, and they give you complete control over the user experience.
Overall, payment gateways streamline the online payment process for your company, allowing you to receive payments more quickly, conveniently, and securely. A payment gateway is what you're looking for if you want to accept online payments or improve the method you're already using.