The It is a fundamental tool for any ecommerce, as it directly influences the user experience and the sales conversion ratios of the store. In this article we break down what parties are involved in the process and how a payment gateway works.
What is a payment gateway for?
The main function of a payment gateway is facilitate the purchase, acting as a portal of entry and remittance of the payment through the processor to the issuing bank, of the payment card of the client, mediator between the banking entities of the client and the merchantguaranteeing that the transmission of information between all parties is carried out quickly and securely.
Who is involved in an online payment service
Besides of customer, merchant and their corresponding banksthe following parts are involved:
Payment gateway
The payment gateway, as such, is a cloud software integrated in the online store that allows communication between the merchant’s bank and the buyer’s bank that is going to authorize that charge. Collects the customer’s payment information and sends it securely to the payer’s bank through the payment processor. It also informs the customer and merchant of the result of the transaction and communicates the possible reasons for rejecting the operation.
Acquiring Bank
Any business that wants to process online payments needs a bank acquisition account, which can be provided by their own bank or one of the PSPs available in our market, such as Ingenico. The purpose of the account is the settlement of funds from your online transactions.
payment processor
It is the channel for interconnection and referral of payment information between the acquiring bank of the merchant and the issuing bank of the card used in the payment.
Customer card system
is the payment network to which the customer’s card is linkedfor instance, VISA, MasterCard or American Express. It allows communication between the payment processor and the customer’s card-issuing bank. The final acquisition price of a transaction is made up of the sum of the commissions earned by each of the aforementioned players involved in the execution of a payment.
How does a payment gateway work?
Now that we know what parties are involved in the process, how does a payment gateway really work? We describe each of the steps below.
- The customer selects one or several products, adds them to the shopping cart, clicks on buy and enter payment information (card details, PayPal account, etc.) in the payment form.
- After pressing the Pay button, the payment information passes encrypted to the payment gateway using SSL (Secure Socket Layer) or TLS (Transport Layer Security) protocols.
- The payment gateway sends the information to the payment processorwhich in turn passes it to the customer’s card system (VISA, MasterCard, American Express, etc.).
- The card system performs a series of checks with the customer’s bank that issued it, such as that the data provided matches, that you have the necessary funds to make a purchase and that the card is not blocked, among others. Additionally, at this time, the issuing bank is responsible for requesting Strong Customer Authentication if it deems it necessary, due to the recent entry into force of the
- The result of the verification is sent back to the card system, the payment processor and the payment gateway communicates the result to the client and merchant.
- at the end of each day the acquirer sends the sum of all sales made to the merchant’s bank account. Commissions of the card system, fees of the issuing bank and payment processor, among others, are deducted.
This entire process, which at first glance may seem long and complex, it happens in just 3 secondswhile making simultaneous purchases in the online store.
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