Payment gateway is a platform used by e-commerce sites to receive payments from the customers and transfer the amount to site owner’s account. Through the interface customer has to input Debit/ Credit card details like card number, expiry date and CVV, the amount then gets deducted from customers account and gets credited to merchant’s account. Payment gateway mainly works as an interface to approve the payment process between merchant and customer. It helps the merchant to gain rapport with customer by making it easiest method transferring money and making it a successful transaction. Because only when payment transaction is successful, your purpose of transaction will be fulfilled. This existence and sustainability of an e-commerce platform depends mostly on its payment gateway.
Functioning of Payment Gateway: Let us try to understand how payment gateway works in a certain number of steps.
- Customer first choose the required item from merchant’s website and proceeds for payment by choosing the payment method. Credit card or Debit card is chosen by customer based on convenience.
- Through a secured gateway details are encrypted and transferred between browser and merchant’s server.
- Transaction details is then transferred to payment gateway through encrypted server. The transaction details are converted to secured message to forward the information to merchant’s bank.
- If the Transaction information is than forwarded to card service provider like visa, master card, American express.
- Card issuing bank receives the receives the request and based on balances available in account amount is processed and the information is sent to processor using a response code.
- The response is then forwarded to payment gateway by processor and payment gateway further forwards to interface used for payment.
- Merchant receives fulfills the order and submits all their approved transactions in a batch to their acquiring bank via processor.
- After the bank completes the settlement and credits the amount to merchant’s account.