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How Does a Payment Gateway Work?

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Payment Savvy, Credit Card Payments, ACH Payments, Debit Card Payments. If you own or operate a business that sells products or services online, the payment gateway is an integral part of your business operations. While many people are familiar with the term, they may not know exactly what it is or how it works. The payment gateway is the interface your customers use when purchasing products or making payments on your website. In essence, it is a software application that is provided by a payment processing specialists like Payment Savvy. Payment gateways can be used for a variety of online payment methods including credit card payments, debit card payments, and ACH payments to name a few.

The Payment Gateway Process

The interface encrypts sensitive financial information in order to make certain that sensitive information passes in a secure manner between the consumer, merchant, payment processor, and bank. The payment gateway performs a variety of processing functions when consumers purchase items from your website. The process begins when the shopper adds the products and services that they are interested in to their virtual shopping cart. It is basically a way to store those items until checkout. When the shopping phase is complete, the payment gateway interface directs the consumer to a payment page, or check out area, in order to complete their purchases.

At this point, they are not required to purchase everything or anything in the shopping cart. The final purchase decision must be made at checkout, where the payment information is entered. Think of it like checking out at a brick and mortar store with a slight difference. The payment information page replaces the physical point of sales system for an online purchase transaction. When the customer checks out online, they are required to enter their payment information on the payment page. For example, they must enter the credit or debit card number, expiration date, and the three-digit security code located on the back of the card.

From this point, the payment gateway begins to process the transaction. The first step is to send the payment information to the issuing bank for approval. The decision is than forwarded to the merchant’s website. The customer is informed whether the transaction has been successfully completed, or the payment method has been denied. Reasons for denial include lack of available credit or insufficient funds in the customer’s bank account. The entire decision making process takes approximately three seconds, so your customers are not waiting long. If approved, the transaction is complete.

The payment gateway issues a transaction receipt, typically in the form of an email. If the payment is denied, the customer is provided with an option to use a different credit or debit card. A payment gateway should also have the ability to provide the business with a variety of customized reports. This feature can go a long way in helping you better manage your company. The payment gateway interface adds a significant amount of value for any type of business that sells products and or services directly from their website.

Payment Savvy specializes in providing organizations with the highest quality payment gateways. Please contact Payment Savvy today for answers to your questions, to review all of your options, or to apply for a payment gateway account. We look forward to hearing from you and working with your company.

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