What is a payment gateway and how does it work? A payment gateway is a software application that payment service
providers use to process payments for online purchases originating on a
merchant’s website. It acts as an interface between the merchant’s website
and a payment processing bank known as an acquirer. Generally, a gateway can be
used for many types of payment methods but for the purpose of this video we
will solely focus on online credit card payments. The gateway encrypts sensitive
credit card details to ensure that information is passed securely between
the customer, the merchant and the acquiring bank. When a customer purchases
a product or service on a website that is connected to a payment gateway, the gateway performs a variety of tasks to process the transaction. Once the customer places their order on the merchant’s website, they choose to checkout or pay, and are then redirected to a payment page to enter their credit
card details. If the merchant is fully compliant with the necessary security standards, the payment page can be generated on the merchant’s servers and the cart information collected and passed on to the payment application in a secure way. The payment page can also be generated by the payment gateway application itself and information can be collected there. Either way, the card and transaction details are gathered and stored on the secure surface of the
payment gateway. From there, the payment gateway processes the transaction and sends all information to the issuing bank for approval via the acquirer and the relevant card scheme. Once the payment has been
confirmed by the card schemes, the payment gateway sends the approved
transaction back to the merchant’s website and then the merchant informs
the customer that the purchase has been successfully completed. Of course, the payment gateway performs a lot of other tasks as well, but when it comes to credit card payments, these are the main steps to processing a transaction. Can you believe that this entire process only takes around three seconds? It took us about ten times the amount of time to explain it to you. Payment gateways add a whole load of value throughout this process. Here are some of the key features. A payment gateway is the most common way for a merchant to connect to the payment system. Only the largest merchants are able to connect to an acquiring bank directly. Gateway transaction fees are very small compared to the advantages they offer in helping a merchant connect to an acquirer, manage their business and control the risks associated with accepting online payments. A good payment gateway will provide the merchant with many customisable reporting options, which help the merchant to manage their
business. A good payment gateway will be connected and able to process many different payment methods that may not yet be offered by the merchant. emerchantpay has its own highly secure PCI DSS Level 1 compliant gateway. Check out our website to learn more.