Online Payment Gateway — Definition, Workflow, Benefits and More..
As shopping shifted to online from the brick and mortar stores, payment needed some modern tinge as well. Payment gateway debuted simply to make online payments easier, faster, and safer for online and offline businesses. Merchants of tier 1 and 2 cities have already embraced payment gateways, but beyond that, payment gateway is yet to expand its span. In the majority of cases, the lack of proper understanding of a payment gateway becomes the reason for not getting one — let’s delve into what is a payment gateway and how it works first.
What Is A Payment Gateway?
Payment gateway meaning sometimes becomes the trickiest part for the merchants, which makes them very reluctant to have one.
A payment gateway is a technical solution that helps a business to accept online payments (all types of electronic payments) from customers. These are useful to online (website and app) and offline businesses equally.
Initially, banks used to provide payment gateways in India, but now, several private companies have stretched their hands to make Indian payment gateways more accessible to the masses. A payment gateway is a medium between the money in the customer’s bank and the merchant’s account that links both these accounts and helps the merchants to receive payment online in India.
Most Preferred Features of Payment Gateway In India
Merchants, while looking for a payment gateway to receive hassle-free payments from their customers, are prone to search for the following features:
Easy-to-use payment integrations
A classy suite of features
Timely settlement system
Recurring billing options
Dynamic speed and guaranteed success rates
Detailed analytics and reporting
Power-packed security
Excellent customer service
These are the features Indian consumers most prefer in the payment gateways.
How Does A Payment Gateway Work?
Let us now move on to the work process of a payment gateway. A payment gateway is a medium between 2 accounts, and it has a crucial role in all types of online money transfers through it.
Here is the step-by-step process:
Step 1: Entering the Payment Details During the Checkouts
During online shopping, the customers have to provide some information to proceed to payment. For example, the name and number written on the card or the UPI number will be asked.
For offline shopping, once the customers complete the billing, they hand over a card or ask for the QR code from the person at the billing counter.
On entering the correct details or swiping a valid card, payment is initiated at this stage.
Step 2: Encryption of The Data
Through SSL encryption, all this data then goes to the payment gateway. This is where a payment gateway takes over the entire task of money transfer.
Step 3: Authorization Request
On receiving the data, the payment gateway sends this encrypted data to the payment processor of the merchant’s account or acquiring bank first. Then, the payment processor forwards it to the card service provider to check the validity of card data and multiple fraud checks.
Once the processor receives a green signal from the card provider, it sends an authorization request to the customer’s bank or issuing bank. It checks whether the issuing bank has sufficient money to complete this transaction and other details. It takes 2–3 seconds.
Step 4: Payment
The issuing bank gives the final verdict for approval or declination. At this stage, the customer and merchant both get the information on whether payment is approved or declined. On approval, payment is made, and on the payment page, the customer can see the confirmation/successful message.
Step 5: Settlement
On successful payment, the money sent from the customer’s bank will be stored in the merchant account, which belongs to the payment gateway. After the settlement period, the merchant gets it in the personal account after deducting the transaction charges.
These five core technical steps occur in just a few seconds, and a customer can see that the payment is done within one minute.
How Do Digital Payment Gateways Benefit A Business?
Moving on to the benefits of a payment gateway for any business, here are a few to mention:
Prevents fraudulent activities
Automates day-to-day- business operations
Offers multiple payment modes to accept payments
Enhances checkout experiences
Provides detailed reports for improved future planning
So, a payment gateway can benefit a business from multiple directions. It does its primary task of smoothening payment collection satisfactorily; at the same time, it aims at delighting the customers by bringing them more comfort and security.
End Words
At present, having a payment gateway is essential, and no matter whether a merchant is into online or offline business, it can benefit the overall business for all. So, from small startups to large enterprises of any location should integrate a payment gateway to bring the ultimate payment ease to their customers and safeguard their businesses with top-notch security. Payment gateways are now coming up with instant sign up options too — so let’s grab one and let your business explore new heights.
