If you think that the online payment gateway is just about facilitating your customers to pay you then you might be wrong! We have been empowering businesses with E-commerce merchant account solutions for more than a decade; our experience speaks that payment gateways help driving business success.
Why an eCommerce Payment Gateway is essential for a small business?
A payment gateway is an e-commerce application that uses a secure internet connection to process credit card payments, verify and accept or decline credit card processing or direct payments on behalf of e-commerce merchants. To ensure that the transaction information is passed securely between the customer and the merchant, payment gateways encrypt sensitive or critical information such as credit card numbers.
As online shopping involves anonymity and distance, payment gateway providers utilizes advanced verification and encryption technology to ensure legitimated transactions between payment portals and the front end processor or acquiring bank this is done to ensure the transaction is done securely without data compromise.
How do payment gateways work?
A payment gateway facilitates the transfer of transaction details between a payment portal like a website or a mobile phone and the payment processors used by an acquiring bank.
Step 1: Customers place orders on websites by pressing the call-to-action button like “Place Order” or “Buy Now”.
Step 2: The web browsers of the customer encrypts the info that has to be sent to the merchant web server to process payment via the SSL (secure socket layer) encryption.
Step 3: This step is broken down into three parts for better understanding:
- The information of the transaction is then forwarded to the payment gateway by the e-commerce merchant. This connection is SSL encrypted.
- The payment gateway, in turn, forwards the transaction details to the payment processor that is used by the e-commerce owner’s acquiring bank.
- The information of transaction is now forwarded to the card association (e.g. MasterCard or Visa) by the payment processors.
Step 4: The entire process in this step may take almost 2 to 3 seconds, however, for the sake of better understanding this step is further subdivided into three parts:
- The bank that has issued the credit card to customer receives the authorization request and sends back a response code to the processor or seller of the product. The response code not only tells the fate of payment i.e. approved or declined but also defines the reasons of transaction failure such as insufficient funds or fraud transaction or any other reason.
- The processor receives the response code and forwards it to the payment gateway so that customer comes to know whether it is processed or not.
- The payment gateway then forwards the received response or code tell the truth to the e-commerce site where it is interpreted as a relevant response and relayed back to the cardholder and e-commerce owner.
Step 5: The e-commerce business owner then submits all the approved authorizations, in a “batch”, to their acquiring bank for settlement with their processor.
All of the approved funds are then released to the e-commerce business owner’s nominated account by the acquiring bank. From authorization to the settlement of funding, this entire process usually takes 2-days.
Why is it important for your business?
Besides credit and debit cards, payment gateways also allow e-commerce business owners to process alternative online payments. Your customer would love to visit your site as most of them are already familiar with the technology.
Hence, it is of utmost importance to get an e-commerce payment gateway solution to optimize your business and reduce fraud risk and other aspects. Here are few more valid reasons to get it done:
It is highly crucial to remove fraud but if you try too hard then you could end up losing your business. This is because if you as an e-commerce business owner reject most sales conforming them to stringent fraud rules then few legitimate transactions may also get rejected.
Streamline the path to data security compliance
The Latest versions of the Payment Card Industry Data Security Standards are even more comprehensive and require a lot of validation requirements. It becomes quite challenging for e-commerce owners who are far behind on the PCI compliance curve. Meeting tougher security requirements means spending more time and money for them.
Helps in making more informed decisions
With a payment gateway, you will make data-driven decisions as you can easily access reports on settlement and dispute. Thus, it would not only speed up your business decisions but also enhance the operational efficiency of your e-store.
Seamless chargeback management
With a payment gateway, investigation and data gathering processes are simple, precise and easy to follow. Thus, by improving chargeback management it contributes to your business success.
If you are looking for a reliable merchant account provider, you are in the right place, as IPAYTOTAL provides the best solutions for e-commerce businesses. We guaranty quick real-time credit card processing, top-notch services and at reasonable rates. Give us a call at +44 800 776 5988 or get in touch with us through our website.