The rise of digital commerce has increased public interest in buying goods and services online. From now through 2025, online payment transactions will continue to grow, with a growth of more than 12%.
As we adapt to an increasingly non-cash transaction, we must start adapting to a cashless world. This calls for secure, easy, and efficient payment service providers to facilitate transactions. It helps simplify how we pay and increase efficiency for businesses and consumers. The service is called a payment gateway.
Payment gateways were typically associated with online payments, but now many service-based businesses are starting to use them. Companies now realise that safe, fast and easy transactions are a necessity.
Simply put, a payment gateway is a secure solution for reading and transferring customer payment information to a bank account for online and direct transactions. It's like a cash register, but the payment is non-cash. Some payment gateways are debit cards, credit cards, eChecks, and digital wallets (Google Pay, Apple Pay, Amazon Pay, PayPal, etc).
Payment gateways function as a bridge between merchants and prospective buyers through online transactions. The main job of a payment gateway is to capture payment info securely, ensure funds are available in customer accounts and get merchants paid.
Payment gateways are software built into point-of-sale (POS) systems or card readers that process transactions when cardholders use their cards to make payments.
In the payment gateway, there are several parties who contributed essential roles, namely:
Gateway authorises customer payments and encrypts cardholder information. It then confirms the price with the issuing bank and deposits the money into the merchant's account.
This function is performed by connecting to a debit/credit card network such as Visa and Mastercard. Once connected, the gateway verifies the customer's credit card information and overall transaction data validity. After the gateway receives a response from the issuer regarding the availability of funds and valid information, the gateway forwards the transaction to businesses and consumers.
Generally, there are three types of Payment Gateways:
Payment gateways secure transactions so that you can stay PCI compliant. Any business that handles cardholder data must comply with PCI standards. The gateway encrypts the cardholder's data to keep the information safe and secure. This helps protect both parties from credit card fraud and other security threats.
Payment gateway transaction fees are lower because there are usually no monthly fees. Payment gateways also streamline the checkout process. When shopping on a website, the costs and time spent are more efficient than manual shopping. This helps the company to focus on business growth.
Flexibility is the main point of a payment gateway. One implementation is that businesses can accept payments in many ways. For example, payment gateways usually integrate with e-wallets and international payments (Visa, Mastercard, and American Express). Businesses can grow and be ready to accept new customers.
As a business owner, you can securely scale up your business by receiving payments from anywhere and anytime. Many options of payment methods help potential buyers complete their purchases. These advantages help companies to increase sales and revenue.
The payment gateway integration process is straightforward. You just need to paste the API code, and the payment gateway is ready to use.
Payment gateways are known as fast, secure and easy to use. Choose a payment gateway that describes these three words and has the following characteristics:
The term Payment Gateway is often combined with the terms Payment Processor and Payment Service Provider, but these are three different things.
The Payment Processor transfers information between the issuing bank and the acquiring bank to transfer money to the business account. The process requires assistance from a Payment Gateway to communicate and authorise transactions. Meanwhile, the Payment Service Provider (PayPal, etc.) includes a Payment Processor and Payment Gateway.
The answer is no. To maximise the payment gateway function, customers must have a debit card connected to a credit card or e-wallet. And the critical point is that not everyone is comfortable with this concept. Some people may be more comfortable paying with cash or other payment systems.
Overall, a payment gateway simplifies the online payment process for your business. This system helps you receive payments faster, more conveniently and more securely. If you are looking for online payments or want to improve your website to make the checkout process more accessible, then a payment gateway is what you are looking for.