What is a payment gateway and how does it work

What is a payment gateway and how does it work

As World is becoming more digital, new types of facilities are becoming available. One of these facilities is the payment gateway. 

If you shop online, pay your electricity bill online, or like to travel a lot, you must have made an online payment. 

If you do any of these things, you must have heard of the term "payment gateway". Through a payment gateway, you can easily make payments to anyone.

Whenever you visit a website and purchase an item and make the payment online, you can make the payment through the payment gateway using your debit card, credit card, etc. 

At present, as the demand for buying and selling goods online is increasing, all businesses have started accepting online payments. 

Now you must be wondering how this payment is taken and through what medium. So let me tell you that any payment on a website is taken through the payment gateway.

What is a Payment Gateway?

A payment gateway is a software application that is a means for customers or businessmen to make or receive payments in online businesses. 

It is a technology that collects payments from the customer's card and then encrypts it for processing.

At present, most businesses have gone online which require a gateway for transactions. The payment gateway encrypts the transaction data history and keeps it completely secure so that no customer can be cheated.

In addition, it also keeps all confidential transactions between the customer and the businessman completely secure. A payment gateway works between a customer and a businessman. 

You can also understand it as a third party that takes money from the customer and transfers it to the businessman's account. For example, if you want to buy a mobile phone online and when you make the payment, it is this gateway that acts as a bridge between you and the mobile selling company.

What is the Role of a Payment Gateway?

The main role of an online payment gateway is to facilitate confidential transactions between customers and merchants. 

The payment gateway plays a very important role in the transaction between the merchant and the customer. 

It makes the payment process very easy for the customer. Payment gateway services are either provided directly by the bank or through a payment service provider that is directly connected to the bank.

How does a Payment Gateway Work?

Now you must be wondering how the payment gateway works. So let me tell you that its job is to settle all your payments. For example, if a customer places an order and then goes to the payment gateway, his payment is easily made. For this, he has to follow some steps.

When the customer places the order, he has to fill in some details. For example, if the customer wants to make the payment with his credit card, he will first have to fill in his card details.

If the order is being placed through a website, the customer's web browser encrypts the card details sent to the company's web browser in a secure way so that it can easily connect to the merchant's web server.

The merchant then sends the payment details to the payment gateway. These details are also fully encrypted.

The payment gateway converts the XML message into ISO 8583 or Variant message format and then forwards the transaction information to the merchant bank after processing it.

The transaction is then forwarded to the Card Association for payment processing.

The Card Association then tells the bank that the card is okay and sends a request back to the processor.

The processor then gets authorized access to the payment gateway and the payment gateway receives the response and processes the payment. This whole process takes 2 to 3 seconds to complete.

The merchant then fulfills the order.

The merchant receives all received payments by the next day.

Types of Payment Gateways:

By the way, there are many types of payment gateways available in the market today. We are going to know about some of them now.

CCAvenue Payment Gateway:

CC Avenue is a commerce service provider that was started in 2001. It is currently considered to be the oldest and most trusted payment gateway in India. It can send and receive money from all types of banks. The world's large company Snapdeal also receives payments through CCAvenue.

PayPal Payment Gateway:

PayPal is currently the world's large company with over 200 million users. It is an American multinational company that was founded in 1998. Through it, payments can be easily made anywhere in the world. It can receive and send all types of payments. It is used in every corner of the world.

Instamojo Payment Gateway:

Instamojo is an online payment gateway that can be used to send and receive money online. The biggest feature of Instamojo is that its transaction fee is nothing, that is, it is completely free. With this, any person can easily do shopping as well.

Paytm Payment Gateway:

Who doesn't know Paytm today? It has become a company that receives a lot of payments every day. The user trust on this company has increased a lot. Through Paytm gateway, you can make and receive payments in large quantities. 

On the day Paytm was launched, the company had more than 1 million users. The company was founded in 2010 and is currently headed by Vijay Shekhar Sharma. The company's headquarters is located in Greater Noida, Uttar Pradesh.

Razorpay Payment Gateway:

Razorpay is an Indian payment gateway that can easily receive any online payment. It receives all types of payments including debit card, credit card, UPI etc. It was started in 2014 and is headquartered in Bangalore. The company was founded by Shashank Kumar and Harshil Mathur.

I hope you liked the information I have given you about payment gateways. If yes, then do tell us by commenting. We are waiting for your comments.

Frequently Asked Questions:

1.What payment methods do payment gateways typically support?

Ans: Most payment gateways support major credit cards, debit cards, and sometimes other options like e-wallets.

2.What happens if my payment fails?

Ans: Payment failures can occur for various reasons (insufficient funds, invalid information, etc.). The payment gateway will usually notify you of the reason for the failure.

3.Are there any fees associated with using a payment gateway?

Ans: Yes, payment gateways may charge businesses processing fees for each transaction. These fees may vary depending on the gateway and the type of transaction. 

Customers typically don't incur fees, but it's always good to check the merchant's terms.

4.How can I choose my payment gateway for business?

Ans: Consider factors like supported payment methods, transaction fees, ease of integration, and customer support.

5.What are the different types of payment gateways?

Ans: There are various payment gateways, each with its own features and pricing. Popular options include CCAvenue, PayPal, Razorpay, etc.