What is a payment gateway with an example?

Payment gateways connect the merchant account provider and the Payment processor to allow the merchants to accept payments online for their business or the technology that moves money between your business’s bank account (merchant account) and your client’s credit card bank is a Payment gateway.

In most of the online businesses like e-commerce, Forex trading platforms, online casinos etc, Payment gateway are usually the checkout page where customers enter their banking information such as their credit /debit card details.

Payment gateway technology helps to bridge between payment processors and acquiring banks to facilitate the transaction.

Example

Merchants do get the chance to select the payment gateway systems which the acquiring banks partnered with or select a payment gateway service provider on their own. Major acquiring banks like U.S. Bancorp offer their own technology for the merchants along with their merchant account services.

Still merchants can choose from various payment gateway technologies as long as they are compatible with merchant acquiring banks which are used to process the payments.

How does a payment gateway work? Which is the best payment gateway?

What is a payment gateway with an example?

Payment gateways connect the merchant account provider and the payment processors to allow the merchants to accept payments online for their business or the technology that moves money between your business’s bank account (merchant account) and your client’s credit card bank is a Payment gateway.

In most of the online businesses like e-commerce, Forex trading platforms, online casinos etc, payment gateway are usually the checkout page where customers enter their banking information such as their credit /debit card details.

Payment gateway technology helps to bridge between payment processors and acquiring banks to facilitate the transaction.

Example

Still merchants can choose from various payment gateway technologies as long as they are compatible with merchant acquiring banks which are used to process the payments.

How does a payment gateway work?

Payment gateways play the key role in online payment processing, payment gateways is the front end technology responsible for making the payment happen.

After selecting the product or service customers are redirected to the checkout page of an online business website. Each payment gateways checkout page may differ according to the merchant's business requirement.

Customers' banking information is entered on the payment page (credit/debit card details) and this information is securely passed to the payment gateway. Please note that there are many options available for integration for example client side encryption , hosted payment page or server to server integration. Merchants can choose whichever is suitable for their business needs.

Now payment gateway encrypts the banking information entered by the customer and proceeds to fraud check before sharing this information with acquiring bank.

Acquiring banks then proceed and share the information with the card schemes and after another fraud check card schemes transmit the payment data to the issuer for initiating the payment.

Once the issuing bank validates the information received from card schemes and accordingly authorises the transaction. Whether to approve or decline (in case of fraudulent transaction/ not enough funds in the account) the transaction.

Once the authorization is completed , merchants can capture the amount for the purchase from the buyer's bank account, even though customers won’t be billed until the capture is completed, but the funds are reserved if it’s a credit card then their card limit is reduced.

If the transaction is approved, the acquiring bank collects the payment from the issuing bank and holds the fund in the merchant account. The funds will be later transferred to the merchant's banking account when the actual settlement will happen which can be varied on a case by case basis as per the contract between merchant and acquiring bank.

All these processes happen in a matter of seconds and payment gateway facilitate this.

Which is the best payment gateway?

There are a lot of different Payment gateway providers and the complexity of choosing the right payment gateway for your business can be a hectic and difficult process. We at Paymentsclarity payment gateway tailor made solutions for each merchant looking at their requirements and expectations delivering a streamlined and engaging payment experience for our merchants. Merchant accounts serve as an indicator that the merchant is the owner of the payment data transferred to the bank as well as the recipient of the funds from the online payments so it’s important to ensure the payment gateways are secure and complies with all the guidelines from the regulatory authorities.

How much does it cost to build a payment gateway?

It can take years to build a Best Payment gateway from Payments Clarity. Considering the gateway development and its cost for maintenance, PCI certification, Licensing, regulations, partnerships and other expenses an estimated minimum viable product for a payment gateway can cost somewhat around $150k to $250k. The more features a gateway has the higher the development cost.

There is a wrong assumption that if they host a payment gateway solution of their own that they can eliminate credit card processing fees that they are paying to their processor, unless you have processing volume large enough such as billions.

Which is the best payment gateway?

There are a lot of different Payment gateway services providers and the complexity of choosing the right payment gateway for your business can be a hectic and difficult process. We at Payments Clarity provide tailor made solutions for each merchant looking at their requirements and expectations delivering a streamlined and engaging payment experience for our merchants. Merchant accounts serve as an indicator that the merchant is the owner of the payment data transferred to the bank as well as the recipient of the funds from the online payments so it’s important to ensure the payment gateways are secure and complies with all the guidelines from the regulatory authorities.

How much does it cost to build a payment gateway?

It can take years to build a Payment gateway services from Payments clarity. Considering the gateway development and its cost for maintenance, PCI certification, Licensing, regulations, partnerships and other expenses an estimated minimum viable product for a payment gateway can cost somewhat around $150k to $250k. The more features a gateway has the higher the development cost.

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