Companies that want to accept credit or debit card payments in exchange for goods or services online will need a payment gateway in order to do so. Payment gateways exist mainly for security reasons, acting as middlemen between e-commerce shopping carts and payment processors. Thanks to the payment gateway, consumers’ credit card information is protected, giving buyers peace of mind about doing business with online companies. The type of payment gateway that should be used by a website depends on a number of factors. Here’s a look at the inner workings of the payment gateway system, the different options available and some tips for website owners faced with choosing a gateway.
How Payment Gateways Work
A payment gateway handles data flow between websites or payment devices and banks or payment processors. As each transaction is processed, the gateway performs several steps to keep payment details secure. After credit card information is entered by the consumer, his or her information is encrypted with SSL and sent to the payment gateway. Next, this data is sent to the payment processor, which forwards it to the relevant card company, such as Visa or MasterCard. Once the card-issuing bank receives the information, fraud checks are performed and the transaction is accepted or declined based on available funds and other factors. The payment gateway is informed of the transaction status, and it forwards this to the original website or payment device so that the order can be fulfilled based on payment acceptance.
A number of payment gateway options exist for companies receiving payments online. Gateways are often designed for use with specific e-commerce platforms, and certain ones are not compatible with each other. Website owners can learn more about their own payment gateway compatibility from their developers. Services offer a wide range of contracts, with lengths, fees, fraud protection and levels of support varying significantly. In many cases, a payment gateway offers clients a dashboard for tracking their sales figures. While some payment gateways are integrated, others are hosted. Hosted gateways are handled by the payment service provider, an option that offers greater security and reduces problems related to compliance and security updates. When integrated gateways are used, clients have more control over the shopping experience.
Factors to Consider when Choosing a Payment Gateway
The variety of options available from gateways means that options are available for every site owner. Many e-commerce sites prefer more options for configuration, but plenty of site owners prefer the convenience of pre-configured gateways. While some gateways include a high level of support, others are less accessible and can complicate business as a result. This means that reputation checks are important before signing a contract. By taking these factors into account when choosing a payment gateway, online companies can begin receiving payments online and work toward success.
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