Understanding Payment Gateways
А payment gateway keeps eCommerce running smoothly through technology that captures and transfers payment data from the customer to the online shop. Understanding the basics of how a payment gateway works will help you decide which payment gateway service is the right fit for your business.
Who participates in a transaction?
First, you need to understand the different players in a transaction.
The merchant is the online business that offers a product or service to customers.
The customer or cardholder is the individual who initiates the transaction to access the merchant’s products or services.
The issuing bank is the customer’s bank and issues the cardholder’s credit or debit card.
The acquirer or acquiring bank is the financial institution where the merchant holds a bank account.
What is a payment gateway?
The payment gateway is the technology that captures and transfers payment data from the customer to the merchant, then transfers the payment acceptance or decline back to the customer. It validates the customer's card details, ensures funds are available and that the merchant is eventually paid. In addition, the payment gateway encrypts sensitive credit card details to secure the transaction.
The need for a payment gateway
There is a significant risk for fraud in transactions where the card is not present, as in eCommerce. This is why a payment gateway is essential for your online store. If you removed the payment gateway from the online payment flow, it would be easier for criminals to access card data. This exposes your business to fraud and damages your brand reputation.
A payment gateway is the caretaker of your customer’s payment data. In addition to fraud management, a payment gateway protects merchants from insufficient funds, exceeded credit limits, and expired cards.
How a payment gateway works
When a customer chooses a product and proceeds to the payment page, a payment gateway often offers them various options for your payment page. These include:
-
Hosted payment page
-
Server-to-server integration
-
Client-side encryption
Discover the ACPAS solution
Merchants and customers both benefit from a payment gateway. Find out more about the payment gateway options from ACPAS. Get in touch with us today.
