Payment Gateways- Payment gateways are how many online credit and debit card transactions are authorized when used on eCommerce websites. Along with merchant accounts and shopping carts (physical or virtual), they are necessary to retail establishments and to many ecommerce sites. This article explains to you the basics of payment gateways.
What Are Payment Gateways?
Payment gateways are the bridge through which a customer’s credit card information is sent to request payment for a transaction that the customer has indicated a desire to make. Even though the shopping experience is somewhat different from the customers point of view, payment gateways are used for both retail and etail sales.
What Is the Process for Payment Gateways?
Step 1-Selection: A customer approaches the checkout or cashier with a selection of items in a real or virtual shopping cart. Whether by lifting items off of shelves and placing them in a physical cart or clicking on buttons and drop-down menus to choose items and identify the number, color, size, and/or initials to embroider or engrave on them, the customer has taken steps to indicate what should be involved in the transaction.
Step 2-Checkout: The customer is explicitly or implicitly given the opportunity to revise his or her selection. The cart contents are totaled, and extra charges such as standard or express shipping, handling, sales tax and/or gift wrapping are added as appropriate. In the case of an online purchase, the customer indicates the address or addresses to which items should be sent. Also, coupons, loyalty club adjustments, and/or sale pricing is applied, and the customer has an opportunity to view the resulting figure.
Step 3- Payment Initiation: The customer presents a form of payment. Depending on circumstances, this may be cash, a check, a money order, a gift certificate, or a gift, debit, or credit card. From here, we will follow the course of the credit card.
Step 4- Credit Card Transaction Initiation: The customer’s credit card is swiped on a POS terminal (Point of Service) or otherwise entered into the merchant’s system, and the merchant submits a request on the customer’s behalf for payment in the amount of the transaction that the customer has indicated her or she wants to make.
Step 5- Credit Card Approval Process: The payment gateway receives the transaction request and securely passes the information to the bank of the merchant’s account, which in turn passes it to the Credit Card Network, from where it is directed to the bank that was responsible for issuing the customer’s credit card. That bank either approves or denies the transaction and takes several steps: 1) it sends the approval or denial back through the Credit Card Network and merchant’s bank and payment gateway to the merchant and customer; 2) if the transaction has been approved, it initiates the settlement process by sending the funds to cover the transaction through the Credit Card Network to the bank holding the merchant account and adds the transaction to any others for which the customer is responsible to appear on a subsequent monthly statement.
