The checkout page is an essential part of any online business. Companies can achieve significantly more conversions if they offer their customers convenient payment options. By choosing a reliable payment gateway, merchants can grow their business and focus on their core business, rather than figuring out how to collect payments.
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What Is A Payment Gateway?
A Payment Gateway is an infrastructure that allows collecting and transferring. A Payment Gateway is an infrastructure that makes it possible to collect and transfer payment data from the point of interaction (Point of Interaction, PI) to the payment provider. The interaction point can be a website, a mobile device, or a terminal.
Simply put, a payment gateway allows merchants to transfer from their customers.
How Does The Payment Gateway Work?
Online transactions through a payment gateway involve several parties. Here are the main ones:
- Company: Any type of entity that sells goods or services.
- Consumer: The payer who makes a purchase.
- Issuing Bank: A financial institution that holds the consumer’s account.
- Acquiring Bank: A financial institution that maintains the seller’s agreement and account.
- Issuer Processor: Technological partner of the issuing bank that takes care of most of the technical functions, such as pin validation (PIN – block), 3D security (ACS), etc.
- Card System Networks: Companies that process debit/credit cards, such as Visa, Mastercard, etc.
- Acquiring Processor: Technology partner of the acquiring bank, usually responsible for payment gateway and POS processing.
Here’s An Example Of How The Payment Gateway Might Work:
- A consumer initiates a payment by purchasing on a merchant’s website.
- The gateway on the merchant’s website sends encrypted payment card information to the card network, through the acquiring processor, on behalf of the acquiring bank.
- Based on the card details, the card network sends the transaction via issuer processors to the issuing bank to authenticate users (in the case of 3D secure) to check whether the balance is sufficient and, depending on the risk rules, whether the issuer has completed the transaction approves.
- The issuer approves or rejects the transaction and sends the response through the issuer processor, the card network, and the recipient processor to the gateway.
- If the transaction is approved, the card network settles the money with the acquiring bank by transferring the money from the consumer’s bank account to the acquiring bank. The acquiring bank then deposits the money into the seller’s account, according to the contract rules and an agreed revolving reserve.
- This current can be shortened by eliminating the issuer processor, the receiving processor, and the card networks. made it possible for licensees to offer account-to-account payments (A2A payments). These payments enable direct transactions from the consumer’s bank account to the merchant’s account, bypassing the acquirers, processors, and card networks. cost less for merchants because they don’t have to pay card processing fees and don’t have to have revolving reserves on acquirers.
