Every business requires a payment gateway as part of its payment life cycle. Businesses must have a payment process in place to allow customers to make payments; in order to increase sales and revenue, the payment process must be simple and clear, and convenient for customers.
Although the payment process appears to be a simple process, receiving payments online is a complex task that necessitates the collaboration of many different parts. You should be aware of the mechanisms that support online payment processing. The payment gateway handles the entire process of making and receiving payments between the time a client pays you and when you get the payment in your account.
You’ll need three vital pieces of software if you want to accept payments online. These three components work in combination, and if any one of them is missing, the entire system will fail.
Payment Processor
The payment processor can be compared to a middleman between the bank and the merchant. By delivering information from your customer’s credit/debit card to your bank and the customer’s bank, the payment processor oversees the card transaction procedure. Payment processing can be used to process any form of transaction and is defined by payment network rules and regulations. It is the online exchange of data and money between the consumer, the issuing bank, the merchant, the payment service provider, and the purchasing bank.
Merchant Account
A merchant account is designed specifically for businesses that want to accept credit and debit card payments. A merchant account is a contract between a business, a bank, and a payment processor for the settlement of credit or debit card transactions. The merchant must also partner with a payment service provider that has the resources and technology necessary to accept different payment methods.
Payment Gateway
A payment gateway is software that allows a company to receive payments from clients via the internet. While the majority of payment gateways accept credit cards, the more advanced ones can incorporate many payment methods into a single interface, such as e-wallets or crypto payments. It simplifies the payment process and ensures that clients have a pleasant payment experience.
Roles of Payment Gateway and Acquiring Bank
The company or merchant is linked to an acquiring bank, allowing them to accept payments via a payment gateway. The money is sent to the merchant’s account with the acquiring bank when a consumer purchases a product or service from a merchant; the bank or the card issuer is not linked to the customer.
The payment gateway connects the client to the acquiring bank and keeps the funds until the pay-out process is completed and the funds are deposited in the merchant’s bank account, which is the acquiring bank. It allows merchants to accept online payments through credit cards, debit cards, bank transfers, and digital wallets.
What is the procedure for accepting online payments?
To begin, the customer selects an item and completes the checkout process. They’ll select credit/debit card payment and enter their card information on your payment page. Following that, the payment gateway receives the card information. The information will be transferred to the payment processor by the payment gateway at this point. The payment processor then sends the transaction information to the credit card network, where it is verified that the customer’s credit card information is correct.
After the verification is complete, the card network gets authorization from the customer’s issuing bank to release the funds. They validate that the card is valid and that the account associated with the card has sufficient funds if the data and transaction are authentic. The card association and issuing bank approve the transaction and forward it to the acquiring bank, which then deposits the funds into the merchant’s account. All of this happens in a couple of seconds, and the user is notified that the money was made and the transaction was successful.
Conclusion
In a nutshell, this is how business online payment processing works. When selecting a payment processor for your company, it’s critical to make sure it’s a suitable fit. Every merchant wants their transactions to run smoothly and without interruptions, but with so many payment providers to choose from, it’s difficult to know which is the best. Aside from technical issues, a firm must examine the amount of convenience provided to its customers and choose a payment gateway that works well with its existing platform.
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