Using a Payment Gateway and Accepting Credit Cards

Finding the Right Gateway to Process Credit Card Payments

You would be hard-pressed to find anyone who does not have a credit card in his possession today. Merchants, too, cannot get very far in generating more business or building relationships with their customers if they don’t process credit cards. Interestingly, in many cases, e-commerce business owners worry more about the design of their website than the importance of using the right gateway in order to validate customer payments and process credit cards.

How Payment Gateways are Used

Accepting credit cards cannot be facilitated without payment gateways, which convey credit card information from a mobile phone, website address, or through IVR (Interactive Voice Response) telephony technology. For instance, when a customer places an order at a merchant’s website address, his information for the credit card or debit purchase is securely conveyed from the merchant’s server via a payment gateway. The gateway is used to send the customer account information to the designated processor that is used by the merchant’s acquirer, also known as the acquiring bank.

Approving or Denying a Credit Purchase

When the payment processor receives the customer’s card information, he then sends the details to the applicable credit card company, such as MasterCard or Visa. In cases where cards, such as Discover or American Express are used, the payment processor does not forward the information but, instead, approves or declines the customer’s card, sending back the response over the payment gateway.

If the credit card used was a Visa or MasterCard though, the bank for the card issuer approves or declines payment with the reason, if the card was not approved, using a response code before sending it back to the merchant account via the payment gateway. While this whole process may sound rather complex, usually the merchant can receive an “approved” or “declined” on a credit card in under five seconds.

A Means of Processing Credit Card Payments

If a payment is approved, then it is added to other approvals and sent to the acquiring bank for confirmation before funds are disbursed in the merchant’s bank account – all which is facilitated in about three business days. That said, you can simply define payment gateways as the means that merchants use to securely transmit their customers’ credit card details for approval on a purchase.

Carefully Review your Choices

When choosing a gateway solution or credit/debit processing provider though, you have to make sure that what they offer will be the right fit for your particular company. As accepting credit cards is an important consideration for most, if not all. businesses, it’s important to carefully review the various gateways and merchant payment processing companies and scrutinize the services they provide in conjunction with their fees.

What to Look for in a Merchant Account Services Company

For example, it’s a good idea to choose a merchant account services provider that is able to deliver a variety of solutions for your business, whether it is an e-commerce operation that provides products and services online as well or a brick-and-mortar location with a web address. In addition to electronic funds transfer and payment processing for the major credit cards, you want a company that provides quick settlement for your approved credit card sales as well.

Choose a Company that Can Meet your Business Needs in the Future Too

Also, does the company have the capability to provide for your future merchant account processing needs? Make sure they are well-equipped to handle all your e-commerce, software, and hardware requirements so you can use them later when your business expands.