A payment gateway works as a system to authorize a payment. It is a third party server that communicates payment information to authorizing banks who will then either approve or decline pending transactions.
How does a payment gateway work?
When your customer makes a payment through your e-commerce site, that payment gateway does a few important things. First, the payment goes through the merchant's server, then transfers the payment between the payment portal and the acquiring bank, and then asks for confirmation from the bank. Depending on the bank's response, that request for authorizing payment can either be accepted or denied. This response goes back to the payment gateway, through the merchant's server and the server's response allowing the customer to check out. This entire transaction takes just a few seconds.
Choosing the Right Payment Gateway
The one main thing to consider when choosing the right e-commerce solution is the platform's ability to take and process credit card payments. Paypal is a great solution, but as an online business, you might need to be more expansive and these top five payment gateways may provide the e-commerce solutions you need. One important thing to note - You might need a merchant account and a merchant gateway that will allow you to also encrypt credit card information so that you aren't liable and your customers aren't having their personal information stolen. This should not be overlooked and will protect your business in the long run.
Advantages of a Payment Gateway
There are guaranteed fraud protection mechanisms already in place which is very important for the customer's peace of mind considering the rampant rate of identity theft. A payment gateway provides quick and easy access. It is also fairly user-friendly to manage the control panel and of course, it's accessible almost everywhere 24/7.
Disadvantages of a Payment Gateway
Depending on your budget, establishing a payment gateway can be quite costly with a high account setup. In addition, there are fluctuating and discriminative rates.
Managing Payments
Once your gateway payment options have been enabled on your shopping cart, you can select the type of payments you accept. You'll also be able to manage your payments and refunds directly from your administration site. To save time, payments can be automatically refunded when a payment is cancelled. You can automatically issue partial refunds or additional charges when changing the contents of orders. Such payment integrations let you choose the best payment options for your business. In this way, you keep control of your payments efficiently while always maintaining your customers' information safe and secure.
Although there is a wide variety of online payment processing gateways, consider some key factors such as setup fees, how secure is the customer information and transactions, the time it takes to process payments, flexibility of currencies and finally, transaction rates. Also consider the ease of use and accessibility of the payment gateway.