In the previous article, you have understood the main players involved in online payments, let us take a step further and analyse the working of a payment gateway throughout the payment journey.
Firstly, the customer chooses the product or service they want to purchase and proceeds to the payment page for checkout and payment. Most payment gateways offer you the below options for your payment page for your business needs:
Hosted payment page
It is generally an out-of-the-box payment page where customers are redirected when they are ready to checkout.
What the payment gateway does here is, it securely receives the transaction data before it passes it to the acquirer.
Why hosted payment gateway then? A hosted payment page helps reduce the PCI burden for online merchants if they do not collect or store the cardholder data on your server.
Integration from server-to-server
A direct server-to-server integration is also known as a direct integration as it enables communication between two servers, mainly the merchant’s server with the payment gateway’s server.
Remember! By requesting the card details on the payment page, a direct transaction can be initiated without getting redirected to the payment page of the payment gateway. This results in comparatively faster checkout, more consistent user experience and better control.
Integration from server-to-server
Client-side encryption, also commonly known as, encryption-at-source.
This refers to encrypting sensitive data on the client-side device before sending it to the merchant’s server. This enables the merchant to simplify your PCI compliance requirements. In a nutshell, it enables you to accept payments on your website while encrypting card data in your browser, using the payment gateway’s encryption library.
- For the transaction, the customer enters their payment card details on the payment gateway page. This information gets securely passed on to your payment gateway provider, based on your type of payment gateway integration.
- The payment gateway tokenises or encrypts the card details and performs fraud checks before they send the card data to the acquiring bank.
- The acquiring bank sends securely the information to the various card schemes.
- The card schemes perform the second layer of check and then send the payment data to the issuing bank.
- The issuing bank after the second verification, authorises the transaction.
- The acquiring bank now sends the approval or decline message of this transaction back to the payment gateway who then transmits the message to the merchant.
- If the payment gets approved successfully, the acquirer collects the payment amount from the issuing bank and holds the fund into your merchant account.
- Funds get deposited into the merchant’s account, a process which is known as the settlement when the actual settlement occurs and it all depends on the agreement the merchant has with their payment gateway.
- Based on the message, the merchant may either display a payment confirmation page or ask the customer to provide another payment method.
Both merchants and customers benefit a lot from a payment gateway. All the steps listed happen in near real time or take approximately three seconds, so don’t worry the process is quite fast!
FINAL THOUGHTS…
Hope you enjoyed today’s article …
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