Payment Gateways - Definitions, Types and More:- www.deekpay.com

Payment gateways: definitions, types and more

A payment gateway is a digital payment service that acts as a channel for making and receiving payments. This technology is the simplest way to receive money digitally. The uses of payment gateways range from sending and receiving payments to banks or e-commerce websites. Therefore, using this electronic alternative to physical or credit card readers allows businesses to process payments with ease.

Here's what we're going to learn about payment gateways.

1. What is a payment gateway?

2. What is the difference between a payment gateway and a payment processor?

3. Three types of payment gateways

4. Considerations for selecting a secure payment gateway

What is a payment gateway?

Payment gateway is the medium of transaction between merchants and consumers. It may exist in offline shops, online websites or through payment services such as UPI, NEFT, RTGS, etc. The payment gateway process involves four parties: the customer, the merchant, the issuing bank and the receiving payment or acquiring bank. It is a simple process.

Customers pass their personal and financial information between merchants and customers by swiping cards or processing bank account information. The security layer encrypts this exchange to prevent sensitive information from falling into the wrong hands. It determines the amount of money in the customer's account that is being used to make a purchase and notifies the transaction of approval or denial accordingly.

What is the difference between a payment gateway and a payment processor?

We have explained above how the whole payment process works. Therefore, it requires two basic components: a payment gateway and a payment processor to ensure success and security. Here are the differences between the two:

The payment gateway receives the customer's information and forwards it to the payment processor for validation through the card system. The payment processor transmits the data and verifies the validity and security of the card details. The payment gateway notifies the customer and merchant of the approval and rejection of the transaction. The payment processor communicates the response to the payment gateway through data transfer between the issuing bank and the acquiring bank. While transmitting the data to the payment processor, the payment gateway needs to encrypt and certify it as an ISO 8583 compliant platform. As a result, payment processors are more expensive and take longer to develop, while payment gateways require only simple SSL encryption. In terms of certification and development costs, payment gateways are more economical and more suitable for startups and SMEs.

Three types of payment gateways

As technology advances, many businesses have moved away from direct bank transfers to using payment gateways as a more convenient, safe and secure way to accept payments. Here are some of the most common types of payment gateways:

1. Hosted payment gateway

With this payment gateway, when a customer clicks on the "Buy" button on the merchant's website, the system redirects the customer to the payment service provider's website. Now, the customer needs to enter the relevant card or bank details. Upon confirmation, the customer is returned to the merchant's website to receive an order confirmation. To ensure customer confidence, merchants can include their logo on the payment page.

2. Self-hosted payment gateways

This type of payment gateway, also known as a professionally hosted payment gateway, involves the customer providing card or bank details on the merchant's website. The customer may be required to submit the information in a specific format. After submission, the data is transferred to the URL of the payment gateway.Since it is on the merchant's website, it provides a better customer experience.

3. API hosted payment gateway

In this payment gateway, the customer enters their credit card or bank details on the merchant's website. Instead of redirecting to a URL page, the payment is done via HTTPS query or API. The merchant has complete control over the entire purchase process. However, in order to offer this service, the merchant must have SSL certification and DSS compliance.

Considerations for Choosing a Secure Payment Gateway

For merchants, a reliable payment service provider is essential to provide a smooth customer experience and increase traffic to online and offline portals. Today, customers can easily download payment service provider apps on their mobile phones. For example, the Bharat QR code in the Android app.

Here are some things to consider when choosing a payment gateway:

Businesses must consider how many payment options and currencies they wish to include in the payment process. The more payment options offered, the more comfortable and satisfied the customer will be. In order to provide good customer service, the speed of the entire sales process is crucial, including the transfer of funds from the customer's account to the merchant's account. Another aspect to consider is transaction fees and service costs. Fees depend on a number of factors such as transaction volume and frequency. For some payment gateways, a merchant account is required. They charge lower transaction fees compared to other options. In addition, they are more secure and reliable for businesses with high transaction volumes. Payment gateways must be 3D secure and PCI data security compliant - the highest level of security.

reach a verdict

After reading the above article, you should have a general idea about payment gateways. Analyse your business requirements and then choose the right payment gateway. Today, payment gateways like PayU offer a variety of web and mobile applications. It is a complete payment gateway solution with low processing fees, low commissions and enhanced security. Build your automated payment process with PayU.