Credit Card Payment Gateway
An estimated 217 million people in the US are online shoppers. Whether it’s a first-time purchase or their 100th, eCommerce has become a staple in many individuals’ lives. For online businesses, there has never been a better time to create a platform for your current and potential customers. To keep up with these consumer trends, online merchants are adopting payment gateway services so that they can process their transactions simply, safely, and securely.
What is a Payment Gateway?
A payment gateway is the channel that transactions travel through before the funds are processed and distributed to a merchant’s bank account. The gateway solution serves to encrypt, process, and authorize all credit card transactions. An online payment gateway is required when a business is planning to manage all credit card transactions online. The term ‘payment gateway’ is interchangeable with merchant gateway, payment portal, or credit card payment gateway. All of these terms simply serve to signify the fact that credit and debit cards are being processed through a specific online channel.
The most important benefit of having a solution like this is security. All businesses that processes credit card information are required to comply with PCI regulations. This secure PCI compliant solution decreases the risk of breaches that are tied to credit card fraud.
Online Payment Gateway vs. Virtual Terminal
| Payment Gateway | Virtual Terminal | |
|---|---|---|
| Credit Cards Accepted | ||
| Debit Cards Accepted | ||
| eChecks Accepted | ||
| PCI Compliant | ||
| Customer Facing | ||
| Customer Entered | ||
| Shopping Cart | ||
| Back-End Form | ||
| Mail Order / Telephone Order | ||
| Merchant Facing |
There are two different payment channels that a lot of new business owners confuse: payment gateways and virtual terminals. Although often used interchangeably, they are actually quite different in their function.
The gateway is the channel for a transaction to be fully processed and funds paid out, whereas a virtual terminal connects to an online payment gateway and provides a back-end form for the merchant to input a customer’s payment information. Virtual gateways are utilized for MOTO (Mobile Order/Telephone Order) orders where the merchant is manually inputting a credit or debit card. But many times businesses prefer to be set up with both abilities for online and back-end processing.
The Process of a Gateway Transaction
Payment gateways complete transactions through HTTPS protocol. The gateway transmits privileged information securely and enables real-time payments online.
From start to finish, the entire process typically takes up to 72 hours. However, the initial transfer of data occurs within a matter of seconds. Cardholders will know instantly if their purchase was validated through the credit card payment gateway by their transaction being accepted.
Integration with a Gateway ID
Once an online payment gateway is created, a gateway ID is assigned to the business. Moving forward, this ID will represent the business and be a way for all entities (the merchant account provider, gateway provider, and processor) to keep track of the payment gateway. Once the merchant has this ID, they can integrate their gateway into their website.
A major function of a gateway for online businesses is the ability to integrate with a third party shopping cart. Many users choose this route to avoid the dated MOTO form of accepting payments as well as the multitude of easy integrations with their existing online platform. By utilizing a shopping cart plug-in for payments, merchants retain the same look and feel for their site and customers have an easy time making a purchase without the hassle of redirects or page changes. For increased personalization, many providers allow businesses to adjust the required fields which creates a smooth experience for both parties.
Depending on your familiarity with APIs and integrations, you may choose to hire a developer to integrate the shopping cart gateway for you. When the two are connected, payments will funnel through, providing quick and easy processing for your customer. There are many options when it comes to finding the right virtual shopping cart. Ensuring your payment gateway provider has the ability to integrate with the add-on is a big concern.
The Purpose of Payment Gateway Providers
After you’ve secured a merchant account through a service provider, the next step will be to set up the payment gateway for your business.
One of the most common providers for this need is Authorize.net. With their gateway, they can securely manage customer transactions with minimal exposure to fraud risks. All transactions can be monitored through a secure interface with a specialized login. On Authorize.net’s portal, you can configure account settings, review transaction history, and develop reports. The gateway provider is also available 24/7 for the merchant’s convenience.
Other common payment gateway services include NMI and USAePay. But, not all payment gateway providers are created equal. This stresses the need for the merchant to know which service they’ll be integrating with. When partnering with a gateway provider, carefully consider a couple important factors: integration and security are of the biggest concern. You can have the best looking website out there, but if your credit card payment gateway is unable to integrate to your site, your customer retention rate will suffer. Likewise, having a secure platform that stores all of your transaction history is also critical.
How It All Ties In
Acquiring an online payment gateway is an integral part of setting your business up for success. The ability to process credit and debit cards is a necessity for those looking to break into the world of eCommerce. Whether the goal is to be able to accept over-the-phone orders or to integrate into an online shopping cart, acquiring this gateway is a necessary step forward.
