How to Integrate a Secure Payment Gateway
Whether you are an eCommerce platform owner or just maintaining your website, you want to provide secure, and seamless payment options for your clients. The payment solution you choose must meet both the needs of your customers and your business. It should, therefore, be secure from fraud, widely supported by payment methods, convenient to use, and compatible with your platform.
Merchants use payment gateways when accepting electronic payments and processing credit or debit cards. The payment gateway you choose determines which currencies you can accept, the transaction fee, how fast your money reaches your merchant account, and what payment methods you’ll be able to offer.
What is a payment gateway?
A payment gateway is a service that authorizes and processes payments in online and brick-and-mortar stores. As a portal, a gateway facilitates transactions between a merchant and a customer. Data is encrypted and secured using security protocols. The data is transferred from websites, applications, mobile devices to payment processors or banks and back.
Payment gateways function in the following ways:
There are a few more moving parts involved in the infrastructure of online payment processing than you may be aware of. Customers are presented with a small window or separate website where they have to pass through the checkout process. Processors verify transaction data on both ends, allowing the customer to complete the purchase in a few seconds, using several financial institutions, or tools.
A payment gateway must perform several tasks during checkout – passing the card number, expiration date, and CVV and the process continues as outlined below:
- Customer: The customer clicks on the Purchase button and enters the necessary information for the transaction. The data is encrypted and sent to the merchant’s web server over an SSL connection.
- Merchant and payment gateway: Following the receipt of transaction data, the merchant transmits it over an encrypted SSL connection to a payment gateway. If a payment gateway stores any data, this data is handled in accordance with strict security standards. In most cases, credit card numbers aren’t stored in a gateway, but rather they are saved as tokens.
- Payment processor: Payment processors receive the information. As third-party players, these companies offer payment processing services. They work in conjunction with both merchant accounts and payment gateways, transferring information back and forth. It is then a payment processor that passes the transaction onto a card network.
- Card network: The purpose of a card network is to verify the transaction data and deliver it to the issuer bank (the bank that issues the cardholder’s credit/debit card).
- Issuer bank: The issuer bank approves or rejects authorization requests. Upon receiving a request from a payment processor, a bank sends a code that contains the details of the transaction status or error.
- Payment gateway: The payment status is returned to the payment gateway, which then passes it to the website.
- Customer and issuing bank: The customer receives a message indicating the status of the transaction (accepted or denied) via a payment system portal.
- Issuer bank: The funds are transferred to the merchant’s account promptly (usually the next day). Transactions are conducted between the issuer and the acquirer.
Payment gateways must ensure that merchants receive funds from customers upon purchase, that they are not at risk for fraud, and that there is no credit risk involved. Even so, it is virtually impossible to prevent all fraud. However, the odds of being scammed are relatively minimal by means of a secure payment gateway.