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Payment gateways are the devices that allow a merchant to accept payment for the goods or services they sell with credit cards. Payment gateways allow the customer’s credit card information to be transmitted to the financial institution that issued it.
Payment gateways are generally established at the merchant’s store payment point. You will also find payment gateways available on smartphones for people doing mobile services. There are also versions of these payment processors that are set up online so that customers can purchase merchandise from Internet vendors.
Usually, when a customer finds something on an Internet site that they want to buy, there is a button to press that says something like “submit order.” The client’s web browser may encrypt the data being transmitted.
Once the merchant has received the information, it will forward it to your gateway. The information will be encrypted again when it is sent from the merchant to the gateway.
The gateway takes the payment information and sends it to the payment processor of the financial institution that issued the cardholder’s line of credit. The bank that issued the card will do fraud checks to make sure the transaction was made by someone authorized to charge the account.
Once they have determined that the charges are being made by a legitimate card user, the bank will check the balance and see if the card has enough available credit to make the purchase. If all goes well, the issuing bank will approve the transaction and send confirmation to the merchant.
The time span for all this to happen will be less than five seconds. A lot happens in a few seconds.
As soon as the merchant receives confirmation that the charges have been approved, they will allow the sale to complete. All the above actions will be carried out again, but this time the trader is waiting for a response that the sale has been settled.
At the end of the day, the merchant will group all transactions into a batch and send them to collect payment. This is like sending a bill to the credit card company that issued the cards that were charged.
By the end of the next business day, most card issuers will have settled accounts with the merchant’s financial institution.
The company that provides the equipment to read the cards will often charge you up to two percent per sale to allow you to use their equipment. This may sound like a large sum of money to pay for the equipment, but companies generally keep the processors and repair or replace them at no additional charge. Provider companies usually make sure that the equipment has the appropriate software and protection systems so that you are legally protecting the information provided by the cardholder.