According to a survey conducted by US Bank, just 50% of people carry cash with them, and they only do so less than half of the time they are out. “Nearly half of customers surveyed maintain less than $20 on hand, and 76% retain less than $50.”
Although it’s self-evident that e-commerce sites must accept credit and debit cards, brick-and-mortar businesses should also invest in the technology that enables these payment methods. Let’s discuss how payment gateways work and what protection they provide in the sections below.
What is a payment gateway, and how does it work?
It’s a technology that enables merchants to accept credit and debit card payments. They help businesses with physical stores as well as e-commerce sites by providing secure digital transactions. You’re not just safeguarding your business from liabilities when you invest in a payment gateway; you’re also inviting additional clients by accepting all payment methods.
The payment gateway‘s prime responsibilities are the transaction process, maintaining security, and organizing customers’ sensitive information. It may also be responsible for storing sensitive data such as credit card numbers or passwords. One of the best examples is Cashfree payment gateway that focuses on establishing a secure connection between a client and a merchant to allow payments. It necessitates the authentication of both parties from the respective banks.
Use a payment gateway plugin that seamlessly integrates with your website to create a seamless checkout process for your customer.
How does it work?
Let’s go a step further and look at how a payment gateway functions throughout the payment process.
- The customer selects the item or service they want to buy and then proceeds to the payment page. Most payment gateways provide you with a variety of payment page alternatives. The merchantman payment gateway provides you with the following choices for your custom payment:
- Hosted payment page:
A hosted payment page is a ready-to-use payment page that redirects consumers to when they’re ready to check out. Before sending the transaction data to the acquirer, the payment gateway encrypts it. If you don’t collect and store cardholder data on your server, a hosted payment page decreases the PCI load for online retailers.
- Client-side encryption
Client-side encryption, also defined as encryption-at-source, encrypts sensitive information on the client’s end before transferring it to the merchant’s server. Using the encryption library of the payment gateway manages the transactions done on your website and encrypts the card data simultaneously. As a result, the merchant’s PCI compliance needs are simplified.
- Debit & Credit card credentials are entered on the payment interface. This includes the cardholder’s name, the expiration date of the card, and the CVV number. As per your interface, the above information is carefully transferred to your gateway.
- Card details are tokenized or encrypted to mitigate cyber frauds & threats before the card data is sent to the acquiring bank.
- The information is securely sent to the card schemes by the acquiring bank (Visa, Mastercard).
- After the second layer of fraud screening, the card schemes submit the payment data to the issuing bank.
- After undertaking fraud screening, the transaction is approved by the issuing bank. The accepted or denied payment message is returned to the acquirer from the card schemes.
- The payment gateway receives the approve or deny notification from the acquiring bank and forwards it to the merchant. The acquirer receives the paid amount from the issuing bank and is paid to your merchant account.
- Through the settlement, funds are transferred into the merchant’s account. Actual settlement takes place as per the agreement with the merchant.
- A payment confirmation page may be displayed on the screen. If not, the customer will be asked to supply other payment methods as per the message.
Why should I use Payment Gateway?
Wallet via PCI-DSS
PCI-DSS compliance ensures that users’ personal information is safe when using the portal or gateway for recurring payments. For instance, if you’ve ordered several times from Swiggy, your bank or card information gets saved on their site or application, and the payment gateway protects it from any cyber threats.
You may use mobile wallet apps to make digital transactions with some payment gateways. This is the current trend because it allows users to complete all of their transactions while sitting in one location. 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 limit the danger 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 instruments (AVS). These techniques ensure that no transactions are fake.
The most significant benefit of a payment gateway is that it may be used by millions of people simultaneously, allowing you to buy and sell goods and services anytime you want.