Irrespective of how impressive your products are, or how attractive your online store looks, accomplishing your ROI goals and getting users to make more purchases primarily depend on the ease of transactions and trust of users. Payment gateway is the key component of your e-commerce website that guarantees hassle-free transactions and assures your visitors of the trustworthiness of your website. That explains why you should be extremely careful while choosing a payment gateway for your online store. In order to make the right choice, you need to understand the working of payment gateways, their unique features and advantages that they offer for your business. We’ll discuss all these points in this post.
How do payment gateways work?
It is an e-commerce application that enables your customers to submit their credit card details and then encrypts this sensitive information to make sure that it passes securely from the customer to the merchant. The transaction process involves a series of steps, which are described below:
Step 1. Customer selects some product or service and enters the credit card information into the payment portal of your website to purchase it.
Step 2. The sensitive information from the payment page is securely passed on to the payment gateway, from where it is tokenized and further transferred to the merchant’s bank account for verification.
Step 3. The merchant’s acquiring bank sends those customer account details to the card issuer for verification.
Step 4. After verifying the customer account, the card issuer approves or declines the transaction and generates a response back to the processing bank.
Step 5. This response is further sent to the customer via the payment gateway and the amount gets credited to your merchant account after getting debited from the credit card account of your customer.
This entire process of transferring payment to your account usually takes a couple of seconds.
Benefits of using Payment Gateways
- Long stay on the website: By using payment gateways, customers need not leave your store for making payments as it was in the case of third-party payment processing systems like PayPal. Also, re-directing your customers to another website can lead to mistrust and payment abandonments, so, payment gateways can help you prevent your users from that too.
- Less time and administration involved: With the processing of credit cards in real time and direct deposition of funds into merchant’s account, a payment gateway can help in saving your time and reduces the need of manual card processing.
- Highly safe and convenient: Payment gateways provide you with a great medium to ensure your customers of safe transactions from the widespread credit card frauds and scams on the internet. By keeping your customers’ personal information confidential, a payment gateway wins their trust making them shop with you without any fear of theft, hacking, phishing, or any other fraud.