Unless you are living under a rock, you might have heard about the payment gateway. It has become the strong foundation of any kind of business. Every small or large business looks for a decent payment gateway that makes the whole transaction process a walk in the park.
Here in this blog, we will learn all about payment gateway and its working.
What Is a Payment Gateway?
Payment gateway is the software that merchants need to incorporate into their business to receive and send payments. A payment gateway allows customers to execute an online transaction using various payment methods such as net banking, debit card, UPI, credit card, and online wallets. It acts as a trusted third party, securely transferring funds from the customer’s bank account to the merchant’s payment portal.
Let’s take an example where you bought a phone from an eCommerce store named XYZ to understand it better. Now the work of the payment gateway is to securely transfer the money from the purchaser account to the merchant account.
Why It is Must for Business Owners to Use Payment Gateway?
Online theft and fraud are not something new. Many businesses have their fair share of it. Fraudsters would have easy access to the card information you handle, putting your company at risk of theft and chargebacks. Furthermore, criminals would develop new ways to conduct unauthorized transactions, making you even more vulnerable to fraud and harming your business ’ reputation. But this all can be avoided by the payment gateway. It protects businesses from insufficient cash, expired cards, canceled accounts, and exceeding limits, in addition to fraud monitoring. Click here to know more about the payment gateway.
How Does Payment Gateway Work?
Now comes the question of how payment gateway works. So here, in this section, we will mention the step-by-step process of the payment gateway working.
The very step is when the customer places the order. After filling in all the details, he/she must click on submit or any relevant button.
After this, the website will redirect the customer to the payment gateway page, where he needs to enter the payment details. After submitting the details, the payment gateway takes the users to the issuing bank page where he/ she needs to authorize the payment using a secure password, OTP or UPI pin.
Once the payment gateway gets its approval, the bank will confirm if the user has the required amount in its bank or not.
After cross-checking the amount, the bank will send the message to payment gateways. If the message is not, the payment gateways will send the error or failed transaction message to the customer. NAd if the message is Yes, the payment gateways will wait for the amount from the customers’ bank.
The next step is the bank settling the amount. They will send the amount to the payment gateway, which gets credit to the merchant account. After this, the payment gateway will send the confirmation message to the customers.
This is how payment gateways work, and the best part about it is all these steps take place in seconds. It is one of the fastest technologies. Money transactions entail sensitive information such as a user’s bank and credit card numbers, purely personal. As a result, it is critical to ensure that sensitive data is kept secure.
That’s it! Here you got all the knowledge of how payment gateway works. In this fast-paced world, you can’t rely on the old methods if you want to succeed. Having a decent payment gateway is a requirement if you want to take your business to new heights.