Payment Gateway Payment gateways play a critical role in any business in today's world. In the past cash and check were the only mode of transaction. It used to be difficult for merchants to carry massive money to the bank. With payment gateway, customers can easily purchase products online and also at a retail store. Merchants do not have to worry about moving that cash from the store to the bank because the funds are directly settled into the business bank account. Merchants can easily integrate the payment gateway on the website by using the API configuration. This API information is provided by the payment processing company or the payment service provider. These days most of the payment gateways providers offer multiple card acceptance. That means customers can use cards from different brands. The processes of a transaction on payment gateway is very simple.Â
Here is a step by step transaction flow. Customer visits the merchant's website and makes the selection of products. After making the complete selection of the products customer clicks on the checkout button. On the checkout page the customer types the credit card information along with other required pieces of information. This information is further moved to the payment processing companies infrastructure. The payment processing company validates the transaction by performing various checks. Most of the fraudulent transactions are declined at this step. If the transaction appears to be genuine this information is forwarded to the card brand. Depending upon the card brand the transaction is approved. In a scenario, if the card brand is the card issuer then the transaction is approved or declined by the card brand. In case if the card brand uses card issuing banks then this information is forwarded to the card issuer bank. The card issuer further validates the availability of balance on the debit card account or the availability of credit line on the credit card. It also decides whether to approve or decline a transaction. Based on the response from the card issuer the merchant receives a response. It may be an approval or decline. If the transaction is declined then the customer has to use a different card. If the transaction is approved, then the customer receives an order confirmation. This is the time when the merchant starts the shipping for delivery of the product. Merchants from low risk industries can find payment gateways very easily but it becomes extremely difficult for merchants from high risk industries of very high risk industries. The reason behind this is that merchants from these industries attract large amount of chargebacks. They also face regulatory challenges.