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HOW DO PAYMENT GATEWAYS WORK TECHNICALLY?

  • e-Commerce Transaction
  • Online Payment Process
  • Payment Gateway Process – A payment gateway is a merchant service provided by an e-commerce application service provider that authorizes credit card or direct payments processing for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. The payment gateway may be provided by a bank to its customers but can be provided by a specialized financial service provider as a separate service such as a payment service provider. A payment gateway facilitates a payment transaction by the transfer of information between a payment portal and the front end processor or acquiring bank.
  • e-Commerce Transaction
  • Online Payment Process
  • Payment Gateway Process – A payment gateway is a merchant service provided by an e-commerce application service provider that authorizes credit card or direct payments processing for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. The payment gateway may be provided by a bank to its customers but can be provided by a specialized financial service provider as a separate service such as a payment service provider. A payment gateway facilitates a payment transaction by the transfer of information between a payment portal and the front end processor or acquiring bank.

A Payment Gateway is a middle-man that securely takes money from your customers and sends it to your bank account. Payment Gateway is a processor that helps in authenticating and authorizing transactions between your customer and your bank.

The payment gateway process starts with a customer placing an order from a payment gateway-enabled seller/merchant.

  • e-Commerce/Online Shopping

When a customer orders a product from a payment gateway-enabled merchant, the payment gateway performs a variety of tasks to process the transaction:

  1. Buyer selects the product, clicks on BUY Button initiating the payment from the merchant’s website where user info is collected
  2. This info is sent to the payment gateway / payment aggregator
  3. Payment aggregator collects card info in a secure server and passes this through its Acquiring Bank (Payment aggregator’s bank) to the Card networks like VISA, MasterCard
  4. The Card Network checks with the Issuing bank (Customer Bank) whether the transaction can be authenticated or not.
  • POS Transaction
  • Debit/Credit Card Transaction – If everything is correct here, consumer a/c or card is debited by the Issuing bank:
  1. Issuer bank sends confirmation to the card network
  2. This is further notified to the acquiring bank and then to the payment aggregator
  3. Payment aggregator now send a confirmation to the Merchant, who further informs the consumer
  4. The consumer also gets notified by his bank (issuing bank) about the transaction
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