The intermediary for online transactions, which securely transmits and verifies sensitive information between the various parties involved in the payment process, is a payment gateway. The payment gateway allows for seamless and secure online transactions, safeguarding the cardholder’s confidential data.
Payment Gateway Processing: How does it work?
A payment gateway is a cutting-edge e-commerce technology that expedites secure online transactions by transmitting and verifying sensitive payment information between parties. The payment gateway processing commences when a customer initiates a transaction by entering their payment details on the merchant’s website.
Subsequently, the payment gateway undertakes the verification of the payment information and securely transmits it to the acquiring bank for further processing, ultimately transferring the funds to the merchant’s bank account. During this process, the payment data is heavily encrypted and fortified with a wide array of security measures, including firewalls, encryption protocols, and fraud detection systems.
In addition to the above, payment gateways provide merchants with valuable tools and insights, including real-time transaction data, analytics, and fraud prevention services. These features help businesses to optimize their online sales and mitigate the risks associated with online transactions.
Payment gateway processing is an indispensable component of the e-commerce industry, making secure and convenient online transactions possible for businesses and consumers alike. As online shopping continues to gain popularity, payment gateways have become an indispensable technology for any business that wishes to accept online payments.
Merchants must, therefore, select a reliable and secure payment gateway provider to safeguard the safety and security of their customer’s payment information.
Understanding hosted and non-hosted payment gateways
Payment gateways play a vital role in facilitating online transactions in e-commerce. They act as intermediaries between merchants, customers, banks, and payment networks, ensuring secure and efficient payment processing. Payment gateways come in two types: hosted and non-hosted.
Several key players are involved in the operation of payment gateways. Merchants are the businesses that sell products or services online, while customers are the individuals who make purchases. Payment gateway providers are the companies that provide the technology and infrastructure for payment processing. Banks and card associations oversee and regulate payment networks while acquiring banks process transactions on behalf of merchants. Issuing banks issue credit and debit cards to customers. The PCI-DSS sets the security standards for payment card transactions.
Exploring the Pros and Cons of Using a Hosted Payment Gateway for Business Transactions
Hosted payment gateways are where the payment process occurs on the provider’s server, and the customer is redirected to the provider’s website to complete the transaction. Small- to medium-sized businesses that need more resources to build their payment infrastructure typically use hosted payment gateways.
One of the main advantages of hosted payment gateways is that they are easy to set up and use. Payment gateway providers take care of security and compliance requirements, which can be complex and time-consuming for merchants to manage. Hosted payment gateways also provide a seamless user experience for customers, as they are directed to a familiar and trusted payment page.
However, hosted payment gateways have some disadvantages. For example, merchants have less control over the payment process and fewer customization options. This can disadvantage businesses that want to provide a unique user experience. Hosted payment gateways also tend to have higher transaction fees than non-hosted gateways.
Non-hosted payment gateways, or integrated payment gateways, allow the payment process to occur on the merchant’s website. The customer remains on the merchant’s website throughout the transaction. Larger businesses typically use non-hosted payment gateways with the resources to build their payment infrastructure.
One of the main advantages of non-hosted payment gateways is that they provide more control and flexibility for merchants. They can customize the payment process to match their brand and offer a unique user experience. Non-hosted payment gateways also tend to have lower transaction fees than hosted gateways.
Examining the Pros and Cons of Non-Hosted Payment Gateways for Business Transactions
However, non-hosted payment gateways also have some disadvantages. Merchants are responsible for managing the security and compliance requirements, which can be complex and time-consuming. They also need to ensure that their website is PCI DSS compliant, which can be a significant challenge for businesses that need to be experienced in payment processing.
The choice between hosted and non-hosted payment gateways depends on the needs and resources of the individual business. Hosted payment gateways are easy to set up and use but offer less control and customization options. Non-hosted payment gateways provide more power and flexibility but require more resources and expertise. Regardless of choice, ensuring that the payment gateway is secure and complies with the PCI DSS (Payment Card Industry – Data Security Standards) to protect customer’s sensitive data is essential.
Who are the key players involved in the operation of payment gateways?
In this section, we will discuss the steps involved in the payment gateway process, which are as follows:
Step 1: Customer initiates payment:
The first step in the payment gateway process is when the customer begins to process the payment. Such will typically be done by entering their payment details on the merchant’s website.
Step 2: Payment details are encrypted:
Once the customer has entered their payment details, the information is encrypted to ensure that unauthorized parties cannot intercept it. Encryption is converting data into a code to prevent unauthorized access.
Step 3: The payment gateway forwards payment details to the payment processor:
The payment gateway sends the encrypted payment details to the payment processor. The payment processor is responsible for verifying the customer’s payment information and checking if the funds are available.
Step 4: Card association forwards payment details to issuing bank:
The payment processor then sends the payment details to the card association, such as Visa or Mastercard, which delivers the information to the customer’s issuing bank.
Step 5: Issuing bank approves or declines transaction:
The issuing bank then reviews the payment details to determine whether sufficient funds are available and the transaction is legitimate. The bank approves or declines the transaction and returns the response to the card association.
Step 6: Issuing bank sends the response to the payment processor:
The card association then sends the response from the issuing bank back to the payment processor.
Step 7: Payment processor forwards the response to payment gateway:
The payment processor then forwards the response to the payment gateway, which in turn forwards the response to the merchant.
Step 8: Payment gateway informs merchant:
The payment gateway informs the merchant whether the transaction has been approved or declined. The payment gateway will initiate the fund’s transfer if the transaction is approved.
Step 9: Funds are transferred:
Once the transaction has been approved, the funds are transferred from the customer’s account to the merchant’s.
Step 10: Payment gateway charges fees:
The payment gateway charges a fee for processing the transaction. This fee can vary depending on the type of payment gateway used and the volume of transactions processed.
Step 11: Payment gateway transfers funds to merchant’s account:
Finally, the payment gateway transfers the funds from the customer’s account to the merchant’s account, minus any transaction fees.
The key players involved in the operation of payment gateways include:
Merchants:
Merchants are businesses that sell products or services online. They rely on payment gateways to process payments and receive funds.
Customers:
Customers are the individuals who make purchases online. They provide their payment information to the merchant, which is then processed by the payment gateway.
Payment Gateway Providers:
Payment gateway providers are the companies that provide the technology and infrastructure for payment processing. They are responsible for ensuring that transactions are secure and compliant with industry regulations.
Banks and Card Associations:
Banks and card associations oversee and regulate payment networks. They work with payment gateways to ensure transactions are processed securely and efficiently.
Acquiring Banks:
Acquiring banks are responsible for processing transactions on behalf of merchants. They work with payment gateways to ensure funds are transferred securely and efficiently.
Issuing Banks:
Issuing banks give credit and debit cards to customers. They are responsible for approving or declining transactions and ensuring funds are available.
Payment Card Industry Data Security Standards (PCI DSS):
The Payment Card Industry Data Security Standards (PCI DSS) set the security standards for payment card transactions. Payment gateways must comply with these standards to ensure that transactions are secure and compliant.
It’s simple; payment gateways play a crucial role in facilitating online.
Payment Processing: The steps involved in processing a payment through a gateway
Step 1: Encryption:
The payment gateway encrypts payment information, such as credit card details, to ensure security.
Step 2: Authorization:
The payment gateway sends the encrypted payment information to the acquiring bank for authorization.
Step 3: Verification:
The acquiring bank verifies the payment information with the issuing bank to ensure the customer has sufficient funds to complete the transaction.
Step 4: Approval or Decline:
If the payment is approved, the acquiring bank sends an approval message to the payment gateway, which then sends a confirmation to the merchant to complete the transaction. The customer is notified of the unsuccessful transaction if the payment is declined.
Step 5: Settlement:
Once the payment is approved, the payment gateway transfers the funds from the customer’s account to the merchant’s account, typically within a few days.
Step 6: Reporting:
The payment gateway provides reports to the merchant that detail the transactions processed and the associated fees.
These steps ensure that payments are processed accurately and securely, from initiating the payment process to transferring funds to the merchant’s account.
What does Easebuzz Payment Gateway have to offer?
Easebuzz is a leading payment gateway provider in India that offers a wide range of services to businesses of all sizes. Our payment gateway is a comprehensive solution that enables companies to accept online payments securely and efficiently.
Here are some of the benefits and features of Easebuzz’s payment gateway:
Secure Payments:
Easebuzz payment gateway provides a highly secure platform that encrypts all sensitive data and ensures safe online transactions. We are PCI DSS certified, which means we meet the highest security standards.
Multiple Payment Options:
Easebuzz offers payment options, including credit cards, debit cards, net banking, UPI, mobile wallet, and more. Such options ensure that customers have multiple options to pay, increasing the chances of successful transactions.
Customizable Checkout Page:
Easebuzz payment gateway allows businesses to customize the checkout page to match their branding and improve the customer experience.
Seamless Integration:
Easebuzz payment gateway is easy to integrate with any website or mobile application. We provide a comprehensive API that enables businesses to integrate our payment gateway into their platform seamlessly.
Easy Account Management:
Businesses can manage their payments, transactions, and settlements through a user-friendly dashboard. The dashboard provides real-time updates on transactions and settlements, making it easy for businesses to keep track of their payments.
Competitive Pricing:
Easebuzz offers competitive pricing plans that are affordable and transparent. Our pricing plans are tailored to meet the needs of businesses of all sizes, from startups to large enterprises.
Dedicated Support:
Easebuzz provides dedicated customer support to ensure that businesses receive the help they need when they need it. Our support team is available 24/7 to answer any questions and resolve any issues that may arise.
In addition to the best payment gateway, Easebuzz offers other products and services, including invoicing solutions, subscription management, and event ticketing. Our comprehensive suite of products and services makes it easy for businesses to manage their payments and grow online.
Overall, Easebuzz’s payment gateway is a reliable and secure solution that helps businesses accept online payments efficiently. With our customizable checkout page, multiple payment options, and easy account management, businesses can enhance their customer experience and increase revenue.
Conclusion:
Payment gateways are the intermediary that securely transmits and verify payment information during online transactions. There are two types of payment gateways: hosted and non-hosted. Hosted payment gateways occur on the payment provider’s server, whereas non-hosted payment gateways occur on the merchant’s website. Both payment gateway types have advantages and disadvantages, and the choice depends on the business’s needs and resources.
Regardless of the type of payment gateway, the payment gateway process involves several steps, including the customer initiating the payment, the encryption of payment details, the forwarding of payment details to the payment processor, and the approval or decline of the transaction by the issuing bank. Payment gateways are essential for the e-commerce industry, and businesses must choose a reliable and secure payment gateway provider to ensure the safety of their customers’ payment information.
FAQ’s
1. How do payment gateways ensure the security of payment transactions?
Payment gateways ensure the security of payment transactions by encrypting sensitive information, using fraud detection tools, and complying with industry security standards. Know More
2. Can payment gateways process different types of payment methods?
Yes, payment gateways can process different payment methods, including credit cards, debit cards, e-wallets, bank transfers, and more, depending on the gateway provider and their supported payment methods.
3. How long does it take for payment gateway transactions to complete?
The time taken for payment gateway transactions to complete depends on various factors, such as the payment method, processing time, and the parties involved. Generally, payment gateway transactions take a few seconds to a few days to complete.
