Tag: Payment gateway integration

How is Payment Gateway different from Payment Aggregators?

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Are you running an online business or planning to start one? You should have financial solutions for your online business to accept payments for the services or goods you will provide. The payment gateway is definitely something you will need, Meanwhile many merchants prefer payment aggregators because they provide a wide range of services and is beneficial in context to fees charged for those services.

What is a Payment Gateway?

Payment Gateway is online software which makes handles online payments with multiple payment modes like Credit/Debit cards, net banking, and more, It acts as an intermediate between a customer and merchant, the customer makes payments for certain goods offered by the merchant through the payment gateway.

What Are Payment Aggregators?

Payment Aggregators are basically service provider which allows the merchant to accept payments through multiple modes like credit/debit cards, Netbanking, and more without having a need for a merchant account. The term ‘aggregators’ denotes merchants are grouped together to opt for a merchant account which is controlled by a payment system on their behalf of them, whereas a merchant account, on the other hand, is owned and controlled by the merchant themselves. In other words, Payment Aggregators allow the merchant to collect the amount without setting up a merchant account that is connected with a bank.

How do Payment Gateway and Payment Aggregator work together?

It is a misconception that a payment gateway is the alone involved in an online transaction, Payment gateway handles only the data involved in the transaction and there are banks that work behind the scenes to issue merchant accounts. There can be too many merchants applying for a merchant account and willing to process payments. In such a situation, the bank has to handle both the underwriting process as well as the transaction of multiple merchants which becomes difficult. This is when a payment aggregator is needed; Payment Aggregators go through the underwriting process with acquiring banks and process payments for many merchants. Well, a Payment Aggregator can offer a Payment Gateway but a Payment Gateway cannot offer a Payment Aggregator. PayU and Instamojo are some of the payment gateway aggregators that provide payment gateway services to different merchants at a specific rate. Payment gateway service provider charges fees to the customer on behalf of the merchant and then transfers the money to the merchant account within a stipulated time period according to the payment aggregators, normally it is 3 days.

Payment Gateway vs. Payment Aggregators

Payment Gateway and Payment Aggregators both are different but interlinked, which means, payment aggregators need not act as payment gateway but payment gateway does need aggregators.

  • Payment Options: The payment gateway in India allows the merchant to accept the payment through available options that are integrated into the portal, whereas Payment Aggregators allow the merchant to collect payment with multiple options like bank transfer, e-wallet, and the latest is UPI.
  • Small Business: Payment gateways use Payment aggregators when it comes to small business because small business finds the transaction fees charged by a single payment gateway high and aggregators are beneficial in context to the cost for services.
  • Intermediates & Interface: The payment gateway acts as an intermediate between the customer and merchant, the customer makes payment through a payment gateway for certain goods/services provided by the merchant. Aggregators act as an interface for the intermediates(Payment gateway) to accept payments and make settlements.
  • Ownership: Payment gateways are owned by Payment Aggregators who cater payment processing for online businesses.
  • License: Payment aggregators require payment aggregator licenses and security certificates like PCI DSS from the Payment card industry. Payment Gateway requires RBI authorization for setting up a business.

How are Payment Gateway and Payment Aggregator beneficial for Small Businesses?

Payment Aggregators are preferred by the small business as they are cost-effective for microtransactions, and payment gateway integration becomes easy for small businesses when catered to by aggregators. Payment Aggregators tend to become a payment processing platform for small businesses because of their minimal or no startup cost and fixed rates.

Benefits of Payment Aggregator over Payment Gateway.

  • Ease of Application: Applying for a merchant account is a time-consuming process that involves a lengthy application and underwriting process, it includes a credit check, PCI compliance check and also close inspection of your business model. Whereas with Payment Aggregators there are minimal requirements and compliance checks.
  • Faster Approvals: For Payment Aggregators, approvals take a few days making it suitable for a small business where time is a constraint.
  • Get paid instantly: Once the application processing is done, the merchant can start accepting payments through multiple payment modes like Credit/Debit cards, Netbanking and more.
  • Simple Fee structure: Payment Aggregators are beneficial for small businesses making microtransactions as the cost per transaction is minimal with aggregators. So it is easier for the merchant to shell out processing fees.

Why Do Your Refunds Take Time?

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If you shop online then you might have faced the following situations,

  1. You return an item and the money was promised to be credited within 5-10 working days.
  2. The amount is debited from your account but the order is not placed.

You expect the refund to be reflected in your account immediately, then why does it take so long?

Well, this blog explains what exactly happens behind the scenes and what you should be doing as a customer to get your refund. The two cases mentioned above are the instances when a refund request is created. Let’s discuss these instances one by one.

1. Customer raises refund request to online business for returned goods.

Payment gateway integration

Customer purchases certain goods online which he/she then returns for some reason like poor quality of goods. The customer raises a refund.

What happens next is a return request is made by an online business via its payment gateway. The payment gateway then transfers the information to the acquired bank via API. The acquiring bank (bank associated with the online business ) communicates with the issuing bank (bank associated with the customer with which payment was made) and raises a refund request. Further, the request is accepted, filed, and processed by the issuing bank and after the process is completed the refund is reflected in the customer’s account.

Though the process seems simple on paper, it is a complicated process as the information exchange takes place between 4-5 different parties and there are many such refund requests raised, thus it takes 5-10 days for the return to reflect in the customer’s account. Sometimes it can take more than 10 days if the return request gets dropped due to System/Network failure and the request needs to be initiated again.

2. The amount is debited from the account but the order is not placed.

The customer makes an online payment for certain goods and services, he successfully checks out making the payment through a payment gateway for desired goods and services. But the order is not placed and the amount is debited from the customer’s account. The customer claims a refund.

How does the payment process work?

payment process flow

There are several steps and parties involved in the entire online payment process,

  1. A website from where the customer makes payment.
  2. Payment Gateway using which customers will make payments.
  3. Acquire a bank (bank associated with online businesses).
  4. Issuing bank( Bank associated with the customer).

While proceeding with the payment you need to choose the payment mode like Credit/Debit card and fill in the details.

Once you finish filling up the details the data is sent to the payment gateway system which then transfers the data to a bank associated with a card. Bank creates requests with payment systems like visa or master card depending on the card used. These payment systems check if the customer has the required amount on balance to pay for the purchase, if yes the bank directly connects with the merchant and the amount is transferred to the merchant’s account within several days.

Impact of failed payment:

Two-factor verification is the most relevant step when it comes to payment processing. After two-factor verification is completed a payment request is made to issuing bank which debits the required amount from the customer’s account. Issuing bank confirms the status of payment to the acquiring bank. The customer then receives the notification regarding the payment via a payment gateway.

Why Does Payment processing fail?

The payment process can fail at any step during its communication from one party to another,

Failure of payment can occur due to network or system failure as the customer should be connected to the internet until the entire transaction is completed.

There are almost 4 parties involved in the complete transaction process. Payment can fail during the communication of issuing bank with acquiring bank or can fail during the communication of the payment gateway with the acquiring bank. There are several infrastructures on which online payment systems work most of which are not that optimized to handle such issues.

Role of Payment Gateway in the refund process.

The payment gateway’s role is to check for the status of payment with the acquiring bank, payment gateway’s job doesn’t stop if the payment status with the acquiring bank is ‘failed’. When this happens, the payment gateway keeps polling the acquired bank for the payment status that is updated as ‘Failed’ and has changed to ‘Successful’. If the status is changed then the online business where the transaction was done is informed and is given two options,

  1. To collect the payment and deliver the goods/services for which the payment is made.
  2. Not to collect the payment as it is no longer in the position to serve the customer for any reason like goods for which the payment was made are no longer available. In this case, the amount will be refunded to the customer within 5-10 business days.

Do not worry about the failed payments and refunds, the amount deducted will always reflect back to the mode of payment selected while making payments. If the payment is made using a digital wallet then the amount will be refunded to a digital wallet and not the bank account.

So shop online and stop worrying about failed payments as you have knowledge about what happens behind the scenes!

 

 

Technology Trends Impacting Small Business Payments

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The rise of affordable and innovative small business payment solutions has surfaced the playing field between small companies and large corporations.

Instead of having to spend lots of money on solutions that are regularly needing to be upgraded, payment innovation has given enterprises of all sizes access to the latest technology and the same processing charges as the biggest players in the marketplace.

With that being said, many small business owners are convinced to use old payment systems and outdated technology. If you aspire to break out of the status quo and embrace the future of tech.

Here are five payment trends you might want to consider:

Mobile POS

Mobile, mobile…mobile. We’re stressing this one because this trend is here to stick — in considerable part due to its ever-evolving possibilities. From mobile payment apps and integrated mobile payments to mobile POS terminals, small firms can get quite a bit of bang for their buck by implementing a mobile payments strategy.

To begin, mobile credit card processing is a way for small businesses to worry less about where they’re physically conducting business, and concentrate entirely on what type of payment experience they’re providing their customers. This includes features like the capability to text/email receipts and the opportunity to integrate better, faster, and more secure payments.

Beyond the convenience perks, mobile POS solutions provide enhanced safety measures to fully protect your business and your customer’s data. Eventually, mobile payments give you that extra peace of mind.

Digital Payments

Speaking of mobile, the next trend prolongs to the other side of the payment innovation equation: Digital payments. Customers today are catching onto the latest payment trends, and many have started ditching the need to pull out a credit card for every purchase. Digital payment methods have enabled quicker, more secure payment processing that streamlines the online shopping journey.

Various big businesses caught onto digital payments years ago. Small businesses need to follow suit if they want to find a competitive and stay ahead of what customers are expecting now. From in-app payments, one-click payment buttons, and P2P payments, small businesses have a number of opportunities to take benefit of in order to better tailor their payment options for their customers.

As credit card crimes continue to dominate news headlines, consumers are looking toward businesses that rely on better payment technology. Obtaining this can be done using digital payment terminals that offer end-to-end encryption and tokenization. Digital payment methods extend the same security benefits, while also granting cardless ways to pay for products and services. For consumers who don’t want to grab that credit card each time they make a purchase, integrating digital payment methods is a surefire way to fill that gap.

best payment gateway integration

APIs

Fortunately, with easier and more efficient integration options now in the market, SMBs can – and should – take full advantage of the power of APIs. Today, there are solutions that make receiving in-app and online payments easier than ever before.

Toolkits, drop-in code, and readily available tech support — like that provided by Digital Payment Guru — is the type of technology that small businesses should be harnessing today. Payment processing services shouldn’t be confined to what offerings your financial institution can provide to your business.

The API trend and recent innovation have encouraged small businesses to integrate more dynamic payment processing features across all of their channels. This technology transformation has also helped businesses connect their in-store and online software so that each system is in sync with the other.

Automation

Another key trend that companies should take advantage of is the ability to automate services — including payments. From recurring billing to subscription services, small companies can find tons of undiscovered value by leveraging automation to streamline payment processing.

Automation can also help businesses rightly connect with their customers. Having the ability to constantly communicate with your customer base is one of the best ways a small business can stay top of mind. Consumers aren’t always going to remember to come back to your physical or online storefronts — you’ll need to nudge them with reminders. Frequent communication can be automated to help you reach customers without investing heavily in mass advertising platforms.

On the payment processing side, manufacturers that already leverage recurring billing services have learned the power of automated payments. Not only does this help keep consistent revenue flowing into your business, but it can also help keep your best customers loyal to your brand. Consumers are eager to regularly engage with their favorite brands, products, and services, but often forget to do so. Solve that by taking the hassle out of the process and offering your consumers a way to become a subscriber. They remain connected to your brand, and you constantly get paid. That’s a payment tech trend that’s absolutely here to stay.

A few essential tips for choosing an online payment will help you avoid the trend affecting your business.

To know if your payment is secure on the internet click here.