A Clear Idea of What is a Payment Gateway and What is its Role in E-commerce for Securing Your Transactions


Operating an e-commerce site requires a payment gateway and there’s no way around it. A payment gateway is a final step of selling a product on an e-commerce website. Lack of a payment gateway won’t let you collect payments from your customers. Though payment gateway seems to be complicated, it is not that difficult once you have a clear concept of it. This article offers you a closer look at what is a payment gateway and its role in e-commerce.

A Brief Introduction on Payment Gateway

A payment gateway is a software application for sending all the credit transactions of users to their credit card processors. After sending credit card transactions to credit card processors, the payment gateway confirms users that their transactions have been authorized. The payment gateway serves as an intermediary between an e-commerce website and the bank that authorizes a customer’s credit card payment. Moreover, payment gateways can process credit cards, debit cards, e-check, and cryptocurrencies. It is very easy to set up a payment gateway for a merchant who already has an account and website. PCI compliant and SSL certificates enable you to choose the correct payment gateway and avoid security issues.

Importance of Payment Gateway Integration in E-commerce

All transactions on an e-commerce website work with the help of internet. Therefore, there is no other way to make your payment without using debit or credit cards. When transactions are processed over a payment gateway, the merchant relies on whatever information the customer provides. Thus, transactions are known as ‘card not present’ transactions. Use of Payments Gateways helps to reduce the chances of scrupulous activities and credit card fraud within an e-commerce business. Online shoppers are accustomed to payment gateways and overall technology. Therefore, payment gateway integration will be beneficial for them while making an online purchase.

Added Benefits of Using Payment Gateways in E-commerce:

The main purpose of a payment gateway is to authorize transactions between your company and its customers. A transaction process can proceed only after getting approval from the payment gateway. Thus, let us know the perks of using a payment gateway. Hence, have a glance below:

1. Accept Both Credit and Debit Cards

In present times, lots of thefts and burglary are taking place and hence it isn’t safe to keep a lump sum amount at your home. Thus, people prefer to use plastic money like credit and debit card to shop from an e-commerce website. Payment Gateways accept debit and credit cards for making secure payments.

2. Real-Time Transaction Processing

Transactions are processed instantly through payment gateways as soon as you place your order and make the payment. Thus, it saves you a lot of time and completes your transaction within a few minutes only. Payment Gateways authorize payments in real time and guarantee the availability of funds. As a result, the funds will reach your account within 3 working days from the date of sale.

3. Secured and Streamlined Transactions

Moreover, payment gateways maintain the integrity and privacy of your transactions by securing it from outsiders. Security compliant payment gateways ensure a safe way to handle online transactions. It needs to comply with some security standards for securing transactions taking place through the internet. If you are using a credit card or debit card, then the payment gateway encrypts the sensitive information. Thus, the information is passed safely between the customer, merchant, and payment processor. Hence you won’t have to worry about the compliance requirements regarding your security.

4. Customized Gateway

It is possible to customize the payment gateway as per the payment process requirements of individual entities. Furthermore, it is possible to enable multiple currency payments, easy generation of reports, account reconciliation, and settlement of payments.

5. Payment Gateway Integration

Online payment gateways integrate with other channels like websites, mobile devices, call center, batch processing, IVR, and Kiosks. Moreover, it is easy to integrate payment gateways especially card payment gateways into a website design. Hence minimum efforts and modifications are required to turn your website into an e-commerce site.

6. Supports Customer Dispute

Payment gateways resist merchants and corporations from misusing the system or making frauds. Apart from this, it takes immediate measures to settle customer disputes arising from their transactions.

7. Acts As a portal

A payment gateway is a connecting link between customers, business, and banking institutions. Whenever an online sale takes place, the payment gateway acts as a portal to transfer the required amount. Hence an e-commerce website won’t be able to accept payments for the good purchased without a payment gateway.

8. Reduction in Overhead

Payment gateways save card processing time and free up resources for improving customer service. Hence, minimum human intervention is required as you will need to handle fewer transactions manually. It is even possible to expand payment gateways by using recurring payments solution.

9. Convenience

You can collect online payments for 24*7 from anywhere on the globe with the help of internet. Hence, you can broaden your customer base by processing all sorts of credit and debit cards with a payment gateway. Moreover, flexibility and recurring bill options are the USP’s of payment gateways. You will get receipts directly into your inbox for weekly or monthly payments from an e-commerce website.

The Working Process of Payment Gateways:

Payment gateways are simple and straightforward solutions that customers can avail to make their purchase. Behind the scenes, a payment gateway is a more complex process. Payment gateways include the following steps:

Step 1: Tye customer visits an e-commerce website and places his order along with the payment information. The information submitted by the customer is encrypted and sent to credit card processors.

Step 2: The payment gateway sends the encrypted data to the merchant’s processor that processes transactions.

Step 3: Then the processor channelizes the transactions to credit card associations like Visa, MasterCard, etc for an interchange fee for each transaction.

Step 4: At this step, the credit card association validates the transaction for approval or denial. The card you are using for making the payment should be valid and there should be sufficient funds in your bank account.

Step 5: The first four steps take in a matter of seconds and then comes the fifth step. The issuing bank starts the authorization with the credit card association followed by the merchant’s business. To be more precise, the authorization is sent back to all the parties involved in the payment processing network.

Step 6: The transaction generally takes a few seconds but can extend up 24 or 48 hours also.

By now hopefully, you have a detailed idea about Payment gateway and its role in e-commerce. Hence, opt for the payment gateway integration and make safer transactions in your business.

Frequently Asked Questions

  1. What do you mean by a payment gateway?

A payment gateway is application software that processes your transaction when you make a payment for purchasing an item from a website. It handles all the aspects for completing the transaction so that the fund reaches your account at the right time.

  1. What is the role of payment gateway in e-commerce?

Since e-commerce is an online platform, sellers can’t sell their products without a payment gateway. Similarly, a customer can’t purchase a product without using a payment gateway. Therefore, the role of payment gateways is indispensable for an e-commerce website. Hence payment gateway integration is the basic requirement for running an e-commerce website.

  1. How does a payment gateway function?

The overall working of a payment gateway is quite complicated as it involves too many steps. When a customer places his payment information for purchasing a product, the payment gateway encrypts the information. Then the information is sent to credit card processors. Credit card processors again process the transaction to credit card association for approval. Finally, the transaction is analyzed and the payment is finalized. For any type of gateway help call: 042480525 to Urban Clap Team in Dubai.

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