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What is an e-commerce payment gateway?

  • Life Style
  • Emily
  • Mar 08,2022
  • 51

What is an e-commerce payment gateway?

A payment gateway is a software application that securely transmits credit card information from a website to a credit card payment network for e-commerce payments. The transaction details and the payment network's response are then returned to the website.

While online transactions may seem quick and easy on the surface, many processes work together on the back end to seamlessly and securely move funds from buyer to seller.

Javelin Strategy & Research monitors and evaluates consumers' payment preferences, indicating the need to integrate e-commerce payment systems into any online site.

How do e-commerce payment gateways work?

The motto behind best payment gateway for ecommerce is to make payment processing efficient, secure and hassle-free. Instead of passing the payment, the payment gateway approves the transfer of funds to the seller, making the payment to the buyer in a safe and secure manner.

The payment gateway even adheres to pCI compliance standards, introducing countless security technologies as expected to prevent fraud. Here are the steps to show how an e-commerce payment gateway works:

Step 1: Once the customer places an order on the e-commerce site and fills in the credit card essentials, the process begins.

Step 2: The web browser encodes the data sent between it and the corporate web server.

Step 3: Next, the gateway sends the transaction data to the payment processor used by the merchant's acquiring bank.

Step 4: The payment processor sends the transaction data to the card affiliation.

Step 5: The credit card issuer sees the approval request and approves or declines it.

Step 6: The processor forwards the merchant and customer related approvals to the gateway.

Step 7: After the gateway receives this response, it transmits it to the site/interface to process the payment.

Step 8: Once the merchant completes the transaction, the clearing transaction is activated.

Step 9: The issuing bank changes the auth-hold to debit, allowing settlement with the supplier's guarantee bank.

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Integrations that are simple Online sales and channel-free synchronization of customer and inventory data with your Square Point of Sale solution are both made possible by Square payment connectors.

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