What is a payment gateway and how does it work?
When your e-commerce customer has "filled his or her shopping cart" and clicked the button that reads "Proceed to checkout" or "Submit order," your shopping cart software will calculate his or her total spent, including any extra fees, discounts, credits, and taxes. The resultant total is what s/he needs to pay you... but how? The usual means are either a credit card or debit card (which includes PayPal as well as bank-issued, Visa-branded or MasterCard-branded cards). Now you need to verify that the customer possesses this card, is in good standing with the issuer, and, in the case of a debit card, has sufficient funds to cover the transaction or, in the case of a credit card, has sufficient credit.
The payment gateway is an application that processes this credit card or debit card information. This software communicates with a payment processor, who handles the actual work of notifying the debit or credit card issuer and authorizes the payment, and sends through the information to the card issuer to deduct that amount from the cardholder's balance or charge his/her account. In its function, it is very like the credit card terminal you'll find in most bricks-and-mortar stores, where the customer swipes his/her card through the machine and, if it's a debit card, punches in a PIN.
The information transmitted to the payment gateway will have been encrypted via a Secure Socket Layer (commonly "SSL") encryption. The customer's information will have been entered through HTTPS protocol, also secure.
There is also something known as Virtual Payer Authentication (VPA), of which "Verified by VISA" may be the best-known brand. This adds yet another layer of security for the merchant. A new product, 3-D Secure, also looms as further help in confirming the identity of the customer for the merchant, since merchant and customer are not face to face and may in fact be separated by a continent or even be in different countries.
The total verification process takes only a few seconds. (Remember the old days, before e-commerce, when even an in-store transaction involving a credit card could take several minutes to verify?) Once the credit card or debit card usage has been verified, the transaction is completed and the customer is free to navigate away from the website, secure that his/her merchandise will ship shortly and that his/her credit card details are safe.
As for the merchant, she or he just rung up another sale... painlessly. Yes!
When your e-commerce customer has "filled his or her shopping cart" and clicked the button that reads "Proceed to checkout" or "Submit order," your shopping cart software will calculate his or her total spent, including any extra fees, discounts, credits, and taxes. The resultant total is what s/he needs to pay you... but how? The usual means are either a credit card or debit card (which includes PayPal as well as bank-issued, Visa-branded or MasterCard-branded cards). Now you need to verify that the customer possesses this card, is in good standing with the issuer, and, in the case of a debit card, has sufficient funds to cover the transaction or, in the case of a credit card, has sufficient credit.
The payment gateway is an application that processes this credit card or debit card information. This software communicates with a payment processor, who handles the actual work of notifying the debit or credit card issuer and authorizes the payment, and sends through the information to the card issuer to deduct that amount from the cardholder's balance or charge his/her account. In its function, it is very like the credit card terminal you'll find in most bricks-and-mortar stores, where the customer swipes his/her card through the machine and, if it's a debit card, punches in a PIN.
The information transmitted to the payment gateway will have been encrypted via a Secure Socket Layer (commonly "SSL") encryption. The customer's information will have been entered through HTTPS protocol, also secure.
There is also something known as Virtual Payer Authentication (VPA), of which "Verified by VISA" may be the best-known brand. This adds yet another layer of security for the merchant. A new product, 3-D Secure, also looms as further help in confirming the identity of the customer for the merchant, since merchant and customer are not face to face and may in fact be separated by a continent or even be in different countries.
The total verification process takes only a few seconds. (Remember the old days, before e-commerce, when even an in-store transaction involving a credit card could take several minutes to verify?) Once the credit card or debit card usage has been verified, the transaction is completed and the customer is free to navigate away from the website, secure that his/her merchandise will ship shortly and that his/her credit card details are safe.
As for the merchant, she or he just rung up another sale... painlessly. Yes!
For more info on choosing which shopping cart would work best for your ecommerce business, visit: http://www.1AutomationWiz.com
