A payment gateway is a commercial service provided by an e-commerce application provider that allows e-business credit cards, e-commerce, traditional bricks, clicks, and mortar payments. Banks can also provide a payment gateway to their customers and can be provided by an independent specialized financial services provider such as PayPal, Square, Stripe, etc.
The payment gateway allows the exchange of payment information between the gateway and the user interface processor (such as a website, mobile phone or interactive voice answering system) or the receiving bank.
The payment gateway helps the payment system to function properly, as it allows consumers and businesses to pay online. You don’t have to be a payment gateway expert when you’re an online merchant, but you do need to understand the essentials of how electronic payment flows from your customers to your bank account.
This article describes how a payment gateway works, why an online reseller needs it, and how to identify the right payment gateway service for your business.
What is the need for a payment gateway?
You might be wondering why there is a payment gateway because it is just an intermediary? Before we address this inquiry, I would like to emphasize that online payment is a transaction without a card. You can’t physically exchange a customer card at a POS end, as you would normally do if you were to pay in the brick-and-mortar business. So the information you send on the payment page can only be used for the card. But how do you know that the card used by the consumer is their card? In card transactions, the risk of fraud is significantly higher, and a payment gateway is useful in this regard.
Online payment systems are not so secure and convenient. But they are also not a priority for hackers or fraudsters. However, companies that rely on e-commerce should be prepared to respond to situations. According to Thales ’2018 security report, 75% of U.S. businesses and retailers have encountered at least one cyber security breach in their online shopping.
Under what circumstances do you remove a payment gateway from a digital payment stream? Scammers would have easier access to your processed card information to get fraud and credits to your organization. In addition, scammers would develop alternative ways to start illegal transactions, which would expose you to fraud and damage your image in the market even more.
Payment gateways keep your customers’ payment information somewhat secure. The payment gateway passes information from you to the merchant, the buyer, and the issuing bank to avoid harmful card information using encrypted technologies. The payment gateway protects traders from expired cards, subcontracted cash, closed bank accounts or credit limits being exceeded, and fraud monitoring.
The difference between a payment processor and a gateway
A payment gateway is defined as a technology that collects and transfers payment information from a user to a supplier. It then notifies the customer of the rejection or acceptance of the payment. The payment gateway secures the customer’s card information securely, the funds are available and the merchants are eventually paid. It acts as an interface between the merchant’s website and the buyer. It encodes sensitive payment information to ensure that the information is securely sent through the merchant from the customer to the receiving bank.
This means that the payment gateway ensures that the transaction can be completed quickly and securely between your customer and the company. An online payment channel can make it easier incorporation use of the software by merchants. The gateway maintains sensitive card information between the buyer and the reseller as an intermediary in the payment process.
How does it work!
Now that we understand why it is necessary to integrate electronic payments or payment gateways for merchants, let’s take a look at how these technologies work and how payment flows from customers ’pockets or accounts to desired accounts. A better understanding of these can be gained by researching various technical topics to improve your knowledge.
- The customer selects the service or product to be purchased and goes to the payment page. Most payment ports offer you several payment options.
- Host Fee Page: A hosted payment page is a payment page from which customers are directed to the checkout. Before transferring to the buyer, the payment gateway handles the transactions securely. If you do not collect or store card information on your server, a Hosted Payment page will reduce the PCI load on online merchants.
- Server-to-server integration: Server-to-server also refers to direct integration that allows data to be exchanged between two servers, a retailer server and a payment gateway server. The live transaction can be started by retrieving the card information from the payment page. Customers can transfer a card payment without transferring it to the payment page of the payment gateway, leading to faster payments, a more consistent user experience, and better management on the payment page from a marketing perspective. Server-to-server integration is appropriate if you collect or store payment information before transferring it to the payment gateway.
- Client encryption: Client-side encryption refers to the encryption of sensitive information from the client side before it is sent to the merchant’s server. It allows the reseller to enhance PCI compliance. In summary, you can collect payments on your website while encrypting card information from your browser using the payment gateway encryption library.
- The buyer enters the information on the debit or credit card page. The information includes the cardholder’s name, the cardholder’s expiration date, and the CVV (Card Verification Value) number. This information is securely transferred to your payment gateway on an integration-based basis (Hosted Payment Page, Client-Side Encryption, or Server-to-Server Integration).
- Before sending the card information to the receiving bank, Payment Gateway encrypts the card information and performs security checks.
- The bank securely transmits the data to card systems (Visa, Mastercard).
- Card systems perform a second level of security and control, and payment information is then sent to the card-issuing bank.
No matter what language you use to create a website, the first three steps of integration are the same.
- First, download the source files from Github.
Java Android SDK: https://github.com/GenesisGateway/android_sdk
- To obtain a username, ID and password, you must sign an agreement.
- Customer-side integration: you need an HTML form to collect credit and debit card information.
First, the reseller must develop an integrated client-side encryption (CSE) library payment form. The console on the merchant settings page can retrieve information from the Custom Search Engine panel.
It is important to ensure that all types of usable transactions are appropriate fields on the payment form. See the event documentation if you are unsure. Don’t forget to replace the action form with the merchant server’s payment processor URL.
Use ‘data-encrypted-name’ to specify card input data. This solution protects the merchant’s server from unencrypted card information and prevents any impact on transaction security and PCI compliance.
The form may have a personal identification feature. You can use the Form Id option to specify each string as a payment form identifier. Make sure that the HTML form is updated and that the option is set to match it.
If the merchant does not have an HTML form, you can obtain HTML-independent encryption from the library of a trusted service provider. In this case, it is absolutely important to keep in mind that the merchant is responsible for ensuring the encryption of the card information before it is forwarded to the server.
HTTP POST access to the gateway API endpoints are required from the merchant’s server. The procedure is the same as traditional customer integrations.