How does the payment gateway work? A step by step guide

A payment gateway is a tech that captures and transmits payment details from the buying side to those who take this payment and then reports the receipt or refusal. It is a online payment service that acts as a channel to make and get payments. The functioning of an online payment gateway obeys a procedure for determining the payment every time. Payment gateway documents required for some cases and this happen when customer orders service/product from a payment gateway-enabled merchant. From filling card details to payment finally flowing into merchant's account and settling, the payment gateway passes through a variety of steps-


How does the payment gateway work? A step by step guide



Step 1: Once the customer places the order online and proceeds to make payment, they need to enter credit/debit card details. Payment gateway documents required to process further steps.


Step 2: The card details are encrypted insecurely and sent between the browser and merchant's web server. A payment gateway rejects a merchant's Payment Card Industry Data Security Standard (PCI DSS) compliance responsibilities without diverting customers away from the website.


Step 3: Further, the merchant forwards transaction details to their payment gateway, an SSL encrypted link to the payment server hosted by a payment gateway.


Step 4: The payment gateway transforms the message and then forwards the transaction details to the payment processor used by the merchant's receiving bank.


Step 5: The payment processor forwards the details of the transaction to the card association.


Step 6: Following, the credit card issuing bank receives the approval proposal, confirms the credit or debit available, and then transmits a response back to the processor (via the process same as for the authorization) with a response code is approved or denied. The reply code also helps to communicate the reason for the case of a failed transaction, for example, insufficient funds, and so on.


Step 7: The processor then forwards the approval response to the payment gateway, and the payment gateway obtains the response and forwards it to the interface used to process the payment. This process is termed Authorization, and this completely takes around 3-4 seconds in general.


Step 8: The merchant then meets the order, and the above process can be replicated, but this time to remove the authorization by consummating the transaction.


Step 9: The merchant accepts all their approved authorizations, in batch, to their acquiring bank for settlement via its processor.


Step 10: The collecting bank makes the batch settlement demand of the credit card issuer.


Step 11: The credit card issuer completes a settlement payment to the acquiring bank.


Step 12: The acquiring bank afterward deposits the approved funds' total into the merchant's nominated account.


Bottom Line:


You all know how important the payment gateway is. So you can follow the above steps to know how the payment gateway works in reality.
 

Comments

Post a Comment

Popular posts from this blog

Single Click Checkout for Ecommerce Businesses: Level Up the Experience

Image
For many years, the checkout experience for customers remained the same. There were no significant modifications or advancements to the checkout process, except for the available payment methods available to the customers. However, over the last few years, there has been a revolution in the checkout process, which has turned the world of ecommerce business on its head. Options like “Buy Now, Pay Later”, and “Buy online” are some of the single-click checkout buttons that have taken the ecommerce world by storm.     Now, let’s understand what single-click checkout is and its benefits.         What is Single Click Checkout?     The single-click checkout happens when the customers visit their online shopping cart and checkout with the purchased items within a single click. The users or customers need to fill in the form with information details such as Name, shipping & billing address, method of payment etc., only once and if it is stored within the payment processor for future purpos
Read more

Best payment gateway plugin for wordpress

Image
  Amazing benefits of Payment Gateway  A payment gateway is a merchant service offered by online storefronts to give users a safe way to enter payment information and authorize credit card purchases. With just a few clicks, the best payment gateway system will incorporate debit and credit card payments into the layout of your website. Transaction costs, customer service assistance, and how seamlessly the gateways integrate are a few factors to consider while looking for the best payment gateway. Given that every payment gateway has different capabilities, it is critical to consider which advantages apply to your company. Choose the  best payment gateway plugin for wordpress.   In this post, you can see the   benefits of a payment gateway : Improves customer experience To enhance the real-time user experience, payment gateways provide extra services. Customers can typically add things directly to their shopping carts, save bundles, and add items to their favorites. Users can quickly cre
Read more

HOW TO REDUCE THE AVERAGE CHECKOUT ABANDONMENT RATE?

Image
  U.S. retailers spend more than $23 billion on digital ads to drive traffic. Still, they're getting fewer conversions. In return, 2.68% of online shoppers make purchases after being shown the ad versus a traditional sales pitch like "come into our store." The key reasons shoppers abandon their purchase are many and varied, which is why some strategies are given here for you to implement on your ecommerce website.   Shopping cart abandonment   An average checkout abandonment rate is common in online businesses where shoppers leave midway without shopping. Companies need to keep track of this metric. It's one of the most critical metrics measured by customer experience and conversion rates. However, there isn't much information on what causes people to abandon their carts so early or why they decide not to purchase that process.   AVERAGE CHECKOUT ABANDONMENT RATE STATISTICS   To optimize your average checkout abandonment rate , you must first understand how they
Read more