What is payment gateway? A payment gateway is a software or a server linking the bank and the internet. For example, PayPal, SecurePay or Authorize.Net. It plays a really important role in the electronic payment process, which is a cornerstone of the success of e-commerce. It gives the green light to the payment between the company and the customers. Why do we need payment gateway? The advantages of payment gateway are that it provides privacy and security to the online electronic payment process. Many confidential data and information will be given during the payment transaction process, such as the credit card number, expiry dates and the 3-digit security code. The information, undoubtedly, requires a high level of security. Another advantage of payment gateway is that it also helps to reach the requirements of the transaction processing system that facilitates the transaction process.
How does a payment gateway work?
1. When a customer makes a purchase and is led to the payment page, payment gateway starts to do its job.
2. The payment gateway will have to encrypt any data of information of the transaction. This is to provide information security to both the customer and the merchant.
3. An authorization confirmation is sent to the bank, which the bank can choose to accept or deny the payment.
4. (This step only happens when the bank accepts the authorization.) The payment gateway will process the payment that may take only a few seconds. How fast and efficient!
5. Once the whole payment process is completed, the payment gateway will clear the transaction.
In what ways does payment gateway favour e-commerce?
1. Almost all e-commerce only accepts electronic payment, an e-commerce could either choose a payment gateway or a merchant account. However, a payment gateway, as a third party, requires less work and provides high security.
2. It also helps to verify the delivery addresses to make sure the products will be delivered to the correct location.
3. One of the advantages of e-commerce is globalisation. Payment gateway helps to locate different customers and accurate the location.