What is a payment gateway?
A payment gateway is a technology that facilitates the transfer of payment information directly from the merchant to the bank or financial institution processing the payment.
Businesses and consumer merchants use the payment gateway to facilitate payments online. Merchants need not be experts in payment gateways, but they should understand how payments flow from their customers to their bank accounts. Using the insights and trends from the payment process journey, you can learn how to select the best payment gateway provider in 2023 and beyond for your business.
Key terms in online payment gateway
The online payment gateway definition begins by identifying the key terms involved in the payment process when a customer clicks the “Pay” button.
Merchants operate in any vertical (eCommerce, Manufacturing, Utility, Education, Labs, Diagnostics, Insurance, Market Place, Etc.) and provide customers with a product or service. The customer refers to the person looking to purchase goods and services from the same merchant who offers and initiates the purchase transaction quickly.
To receive payment, the acquiring bank transmits the merchant’s transaction to the issuing bank, also known as the issuing bank. Also called the purchasing bank, the acquiring bank, or the merchant’s bank account. An issuing bank issues the cardholder’s credit and debit cards for their card schemes. (Example: Rupay, Master Card, Visa, American Express, HDFC Bank, SBI Bank, ICICI Bank, Axis Bank, Etc.)
What is the distinction between a payment gateway and a payment processor?
In a payment gateway, customer data is transferred to the acquirer, and then the acceptor and decliner information is sent back to the customer. Gateways provide security, ensure that funds are available, and ultimately facilitate merchants’ payment. They act as a bridge between a merchant’s website and its acquirer. Such a way will secure the transmission of credit card information from the merchant to its acquirer.
By using an online payment gateway, merchants can ensure that transactions are completed safely and promptly. The payment gateway acts as a middleman between the customer and the merchant. Gateways provide a platform for merchants and acquirers to manage sensitive card information.
Payment Gateways: is the Need of hour?
In some ways, you may find it odd to need a payment gateway if it is only a mediator. Let us first point out that online payments do not take place with physical cards. You cannot swipe the customer’s card at a POS terminal. The information a customer enters on the payment page is the only one you can trust, unlike when you pay brick-and-mortar. Using a payment gateway helps reduce fraud risk associated with card-not-present transactions.
Fraudsters could further exploit your business’s data if the online payment process removes the payment gateway. Such a stance can lead to fraud and chargebacks. In addition to initiating illegal transactions, fraudsters may use other methods to harm your brand’s image and expose you to further fraud.
Easebuzz Payment Gateway acts as the steward of your customer’s payment data. Online merchants use payment gateways to relay information between you, the merchant, and the bank offering the payment. Encrypting a merchant’s sensitive card information helps protect it from unauthorized hackers, expired cards, insufficient funds, and exceeding credit limits.
How’s the Easebuzz Payment Gateway system work?
Now let’s explore how an Easebuzz payment works from start to finish.
- A customer selects the product/service they wish to purchase, then proceeds to the payment page. Payment gateways provide many options for your payment page, with Easebuzz payment gateway offering a wide variety of options.
- Hosting Payment Pages: Hosted payment pages let customers send credit card data to the payment gateway and the acquirer. The payment gateways receive the data securely before passing it on. Since hosted payment pages store no cardholder data, online merchants are relieved of the PCI compliance burden.
- The integration of two servers, or direct integration, is called server-to-server integration. Direct transactions are initiated by asking the payment page for credit card information. By not redirecting customers to the payment gateway’s payment page, customers can complete card payments directly from their browsers.
- Quicker checkouts, a consistent user experience, and greater control over the appearance of a merchant’s payment page. A server-to-server connection is best if you handle payment data before it is forwarded to the payment gateway.
- An essential feature of client-side encryption is the encryption of sensitive data on the client’s device before it is sent to the merchant’s server. Client-side encryption is also known as encryption at the source. Using an encryption library provided by the Easebuzz payment gateway, you can encrypt card data on your website to comply with PCI compliance.
The process to be continued –
Customer details must be entered on the payment page, including the cardholder’s name, expiration date, and CVV number. The Easebuzz payment gateway securely transmits this information depending on how you integrate it (hosted payment page, server-to-server integration, or client-side encryption).
1. Before sending card details to the acquiring bank, the payment gateway validates and encrypts them.
2. By securely transmitting information to the card schemes (RuPay, Master Card, Visa, American Express, HDFC Bank, SBI Bank, ICICI Bank, Axis Bank, Etc.), the acquiring bank is capable of protecting the cardholder’s data.
3. Upon receiving payment data from the card schemes, the issuing banks perform fraud screening; after performing such screening, the issuing bank authorizes the transaction.
4. The card scheme transmits a declined or approved payment message to the acquirer.
5. If the issuing bank supports the payment, the acquiring bank will collect the funds from your merchant’s account once the acceptance or denial message is sent to them.
6. Settlement occurs when the funds are deposited into the merchant’s account. Payments are deposited according to the merchant’s agreement with his payment gateway.
7. According to the message, the merchant can either display a page with payment confirmation or offer another payment method.
Although most of the payment gateway activity takes place in the background of each transaction, it is still beneficial for both merchants and customers. These steps can be completed in nanoseconds or even within two seconds.
What do we understand as a merchant account?
- Making payments online and using cards requires a merchant account. A merchant account can be offered by a payment gateway, a payment service provider (PSP), an acquirer, a payment processor (PS), a high street bank, or an independent sales organization. The merchant identification (MID) number will be assigned to your merchant account after your application is approved for a merchant account. Following authorization of payments by your acquirer, the MID is used to process credit card transactions and transfer funds from customers issuing banks to your bank account.
- Customers transfer money to the payment gateway. Why isn’t the money directly transferred from the issuing bank to your business bank account? You need a merchant account to ensure that your chain of approval holds from when a consumer submits their card details until you receive payment.
- Your transactions may be subject to returns, depending on your industry and business nature. As an online seller, you can return merchandise, but you may have to pay back some of the money you received. The Sooner the returns you get, the more will help to be deducted from the merchant account, and the remaining funds will get transferred to your bank account.
- The merchant account is easier to get paid. The Easebuzz payment gateway collects deposits from multiple sources and combines them into one account for your bank account. Such a way solves reconciliation easier.
- You will need two merchant accounts if you are both an online merchant and a brick-and-mortar merchant. Payment reconciliation is done by comparing your bank statements with your accounting records, payment gateway, or PSP’s records.
The Difference Between Payment Gateways and Merchant Accounts
The two serve different functions: a payment gateway facilitates online transactions. It allows you to process them, while a merchant account is a holding account where those payments land before being deposited into your regular bank account.
How do I set up an Easebuzz payment gateway?
- Step 1: Create a free account to begin receiving payments online.
- Step 2: Verify your email address.
- Step 3: Submit your KYC documents.
- Step 4 = Immediately go live and start accepting payments online.
How do you choose the right payment gateway for your business?
There is one-stop shopping with Easebuzz, a provider of payment solutions. Payment gateways and merchant accounts may seem complicated, but they are not. We integrate shopping carts, fraud screening, payment gateways, and acquiring and popular alternative payment methods.
The Easebuzz payment platform was designed with the customer experience in mind so that you can find all the information you need about India’s best payment gateway. That’s why Easebuzz keeps the customer in mind before providing services for them.