How does payment gateway work

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Share your feedback. Send feedback to the editorial team. Rate this Article. Thank You for your feedback! Increase your sales by offering the right e-commerce payment methods , or 2. E-commerce payment gateways — what works best? Email: info comalytics. Search for:. Toggle navigation. E-commerce — How payment gateways work. Tips: If you are using a 3rd party page, ensure the check-out pages look as close as possible to the rest of the pages on your website.

Not all of them offer this option. Ask your website development company to explain i-frame options to you — which will help a lot in creating a seamless experience. Share this content! Recent posts B2B online success through adoption and acquisition What role does B2B e-commerce play in an omni-channel strate B2B e-commerce: three layers to growth This site uses Akismet to reduce spam. Learn how your comment data is processed. Learn More. Guides 4 min read. Reading Time: 4 minutes The recent growth of online payments is a testament to how crucial payment gateways are for your business.

What is a payment gateway? How can a payment gateway benefit my business? Faster payments As a business owner, you know that it is hard to get paid at all. This means that only the customer and their issuing bank will be able to access their information.

Card services provide an additional security protocol called 3-D Secure. This requires the customer to create a password for every card that they use to make an online payment.

How do online payments work with a payment gateway? Payment gateways are the services that authorise credit card payments for online and offline businesses. It is the equivalent of a physical point-of-sale POS terminal in a shop or restaurant. It lets your customer submit their credit card details and then securely passes this information from the customer to the merchant and then between the merchant and the bank.

It's worth noting that "payment gateway" and many related terms in the area of credit and debit card payments may not be defined in any legal, regulatory, or "official" documentation, depending on where you are located. As such, different people and organisations commonly use these terms with differing definitions. A merchant account is a special type of bank account businesses use to accept credit or debit card payment from their customers.

Funds received from customers are temporarily held here before being deposited into your bank account. Payment gateways are often confused with merchant accounts. To take payments online you need both a payment gateway and a merchant account, but they are not the same. Payment service providers or PSPs are companies that provide a variety of services to a business to help them get paid.

They commonly provide both a merchant account and a payment gateway to a business, helping the business collect and manage its payments. Payments go to the PSP and are then transferred on to you. Within the process of online payments via credit or debit card , a payment gateway does the following:. Collection - When your customer navigates to the checkout on your website to enter their credit card details, the payment page will either be provided by your payment gateway or will securely transfer the details to it.

Transfer - The payment gateway securely transfers your customer's credit card details and details about the transaction to your payment processor A. Authorisation - After this information makes its way through the card network and to your customer's issuing bank , authorisation of the transaction will make its way back to your payment gateway, where you and your customer are informed whether the transaction is successful or not.

There are a lot of different options for you to choose from when looking at a payment gateway. Some of the main options include:. Sage Pay. Payment service providers are typically easier and quicker to get started with as you don't need to set up your own merchant account and if you do the provider will offer that too :. Before you can start taking payments with a payment gateway, you will typically need:. It is generally quite simple to get set up with a payment service provider but requirements do still vary from provider to provider.

If you choose to use a newer full service provider like Stripe then you'll just need a bank account, email address, your account details and to answer some questions about your business. Choosing a payment gateway or payment service provider can be difficult, considering the sheer variety of choice in the market.

We have come up with a list of 10 quick questions to help you ensure you get the right payment gateway for you.