A comprehensive overview of payment gateway
In a rapidly growing world, more and more people are choosing to shift from making purchases in physical stores to buying online. This recent surge in online shopping has made the presence of online payment gateways increasingly vital for eCommerce businesses.
Payment gateways are critical to the success of these businesses. They become a valuable asset in reducing the potential loss caused by late payments because they enable quick and efficient payment processing. They also ensure the safety and smoothness of transactions, instilling trust in both merchants and customers. As eCommerce continues to grow, the significance of payment gateways in this digital landscape cannot be overstated.
What is Payment Gateway ?
Payment gateways is a online service which helps business to receive the payment from their customer through eCommerce website or mobile applications. In payment gateway transaction both customer and business need to work together to complete the transaction.
In simple word, when customer placed order and proceed their payment in your website, payment gateway check and verify the updated customer account or card details and make sure that customer account has enough amount to complete the payment.
Payment gateway provides multiple payment options to customer to increase their convenience in online shopping. Payment gateways provides payment options like debit card payment, credit card payment, e-wallet payment, net banking payment and etc.
Key terms in payment gateway
Before we delve into the actual process at hand, it would be wise to familiarise yourself with a few key terms that will greatly aid in your understanding.
Merchant and merchant account
Merchant means a business or individual selling goods or service in online. Merchant account is a current account which is created for your business to receive payment through multiple ways like debit card, credit card and other electronics payments. This is the account where all the money that your customer paid will be reached. In simple words it is the destination for the transaction amount which is paid through the payment gateway.
Customer or buyer
Customer or buyer is a person or business buying the goods from your eCommerce website. Customer buys the goods or service and then they pay for goods and services online using a variety of methods such as debit or credit cards, net banking, UPI, and online wallets.
Payment processor
Payment processor which helps to connect merchant account, customer account and payment gateways to provide a safe and smooth transaction. Payment processor check and ensure that customer has enough money to pay you and then it proceed payment. If customer account is not having enough money then process will be declined.
How payment gateway works
The following steps provide a detailed explanation of how online payments work with a payment gateway, which serves as a secure bridge between the customer and the merchant’s website.
- Choose the payment gateway provider who match your expectations and requirements.
- Integrate the selected payment gateway with your eCommerce website.
- Buyers will purchase the goods from your website and click on payment option to update the payment details i.e they will enter debit or credit card details to proceed the payment.
- Received order and payment details will securely sent to payment processor and payment processor reach customer bank server and check the updated details correct or not. Only customer and customer bank able to access the customer card details
- Then payment processor check the customer account and ensure it has enough money to pay you. If they do then payment gateway proceed payment transaction.
- Also the payment gateway utilises anti-fraud tools to prevent fraudulent transactions.
- Then payment gateway send request to customer account bank to initiate transaction and then customer bank send the specific amount to the merchant account.
- After receiving money from customer account, usually the payment gateways takes few days to deposit the money in merchant account. It depends on the payment gateway provider you selected.
- Also payment gateways charge some percentage of amount from the payment with GST. The percentage will be different for each different payment gateway provider.
- After transaction, payment gateway sends the transaction message to merchant and customer
Here are a few payment gateway providers that you can consider for your needs. Additionally, it’s worth noting that there is a wide range of other payment gateway providers available in the market for you to explore and choose from.
- Razor-pay
- Instamojo
- Cashfree
- Paypal
- Paytm
- CCAvenue