Know The Workings of A Payment Gateway
A payment gateway is a third-party service that enabled making virtual payments from a portal from the customers bank to the merchant bank in exchange for goods and service. There are processes that are performed in a short time frame. Here is an overview of how the process occurs.
- A customer places an order on the website. The customer’s Web browser encrypts the information using SSL (Secure Socket Layer) encryption to be sent to the merchants web server.
- If the product is in stock, the merchant than redirects the transaction details to their payment gateway using another SSL encrypted connection to the payment server on the payment gateway.
- Once the payment gateway gets the request, it forwards the transaction information to the processor that is similar to the merchants acquiring bank.
- The processor sends across the transaction information to the card associations like Visa or Mastercard for3D verification. If the verification is successful, the card association connects the transaction card issuing bank.
- The credit card issuing bank gets the authorization request and sends a response back to the processor along with an authorized response code. The code will contain information regarding the approval or rejection of payment. The code also declares reasons for failed transactions (like insufficent-funds or bank link not available)
- The processor than sends the response back to payment gateway
- The gateway sends the response to the vendor website and the transaction ends with the information relayed back to the cardholder and the merchant that the account has received the paid order.
- Once the online transaction is overm, the merchant has to ship the product before the transaction is finally settles.
- The merchant has to then all the approved authorizations in “batch” to their acquiring bank to settle the transactions.
- The acquiring bank sends out the entire chunk of approved funds in to the merchant’s account. The process takes 3-4 business days to complete in entirely.