Whether your business is online or offline you need a payment gateway to accept online payment Basically, payment Gateway is third party service which provides the facility to accept money from the buyer to seller. Payment gateways are verified and tied up with all registered banks around the world. Almost all payment gateways charge some percentage (2% to 10%) for each transaction on the website. Hence Payment Gateway provides a secure and fraud-proof system to an eCommerce website where users can choose the payment method option of their choice. Finally, Merchant can view all transaction in their website dashboard
How payment Gateway works
A payment gateway is an online application that works as a third party between customers, merchants, and banks. It approves, investigates, and verifies the payments in every process of regular transactions in the Business activity. In these basic steps, we can understand the technical way of working on a payment gateway.
Collection → Authentication → Authorization → Settlement
Step 1: Collection
First of all the customer selects the product or the service which they want to buy and enters the details in the checkout page. Then payment gateway securely collects the payment from customers bank. At this step payment gateway safety process all customer’s sensitive information like the credit card number etc
Step 2: Authentication
At this step, The payment gateway collects all this transaction information and verifies it whether the entered information is correct and redirects him to the customer’s bank via the protected link.
Step 3: Authorization
In this step, the customer’s bank verifies this payment by checking the card credentials entering by him. It also checks the funds that are available in the customer’s bank account for that particular transaction. After this verification, the bank authorizes the transaction with the result displayed as “Successful” or “canceled”.
Step 4: Settlement
In the last step, the bank makes the following payment to the payment gateway. Then payment Gateway settles money with the merchant as in terms of a service charge of payment gateway as it was decided by the payment gateway provider and the merchant.