What Is a Payment Gateway?
Payment gateway is a service platform that provides merchants with a series of payment-related services, such as payment API access, payment settlement, payment security, etc. Payment gateway interacts with the API of merchant website, passes the customer’s payment information to the key parties of the transaction for validation and authorization, and returns the payment result to the merchant website.
The role of the payment gateway.
The main role of the payment gateway is to realize the online payment function. When a user purchases goods or services from a merchant’s website, he/she can complete the payment operation through the payment gateway. The payment gateway will encrypt the user’s payment information and pass the payment request to the bank payment system through a secure channel to complete the payment process. At the same time, the payment gateway is also able to provide transaction inquiry, reconciliation, refund and other functions, which is convenient for merchants to carry out payment management.
What are the components that work with the payment gateway in the payment process?
1.Payment Service Provider: A third-party payment company that provides payment processing services to merchants.
2.Merchant: Any party that sells goods and services through an online/in-store store.
3.Cardholder: a customer who purchases goods.
4.Card Issuing Bank: The financial institution that holds the customer’s account, which can be a credit card account or a checking account linked to a debit card.
5. Acquirer: The financial institution that holds the merchant’s account and securely transmits card payment data to the card group for authorization by the card issuer.
6. Card organization: The credit card company that manages the card and connects the acquirer to the issuer to transmit card information, such as Visa, MasterCard or American Express.
How does a payment gateway work?
1.The cardholder initiates a purchase, for example, by clicking a “buy now” button
on the merchant’s website.
2.The payment gateway goes into action,first checking with the issuing bank to make
sure funds are available. It’ll ensure the transaction won’t exceed the customer’s
credit limit or bank account balance.
3.The payment gateway sends encrypted card information to the card schemes to
process the transaction.
4.The card schemes approve the transaction,and the payment gateway sends the information back to the merchant website to complete the transaction.
5.The payment gateway sends the information to the acquiring bank to move
money from the customer’s issuing bank account into merchant’s account.That completes the settlement.
Advantages of the Payment Gateway.
1.High security: The payment gateway adopts a variety of security encryption technologies to ensure the security of users’ payment information and transaction data.
2.Support a variety of payment methods: the payment gateway can support a variety of payment methods, including credit cards, debit cards, third-party payments and so on.
3.Transaction speed: the payment gateway adopts real-time processing technology, which can complete the transaction processing immediately after the user pays, and reduce the waiting time of the user.
4.Provide risk management tools: The payment gateway provides risk management tools, which can monitor and manage the risks in the payment process.
5.Provide detailed transaction reports: the payment gateway can generate detailed transaction reports, including transaction amount, transaction time, transaction status and other information.