A payment gateway is a crucial component in an online and offline business. It enables merchants to accept payment from their customers through multiple channels, such as debit cards, credit cards, and e-wallets. There are different payment options that are used worldwide and there are many advantages and disadvantages that the users need to keep in mind while using them, all those precautions will be discussed in this article.
When shopping in a physical store, a non-cash transaction typically involves swiping the card and then doing the payment, the payment machine scans the card and the customer’s payment is done through it. But prior to this, there are some important crucial functions which are performed, so let’s know them also.
STEP 1: When the consumer decides on the products he/she wants to purchase and adds them to their cart, then they are taken to the payment gateway on the merchant’s server. Here the consumer is given the choice to select the mode of payment with which he/she wants to opt to further proceed with the procedure.
STEP 2: When the card details are submitted by the customer, then comes the verification process, in which the customer needs to verify the details which are entered by the customer so that if there are any changes which are required to be made the customer can make them accordingly.
STEP 3: The data which is encrypted by the customer, is then sent to the payment processor. Here the payment processor is the tech which then verifies the information with the processor and then further moves with the payment procedure.
STEP 4: The payment processor acts as a mediator between the acquiring bank(the bank of the merchant) and the issuing bank(the bank of the customer), evaluating the transaction.
STEP 5: The decision of the approved or declined transaction, depends on the issuing bank and the card network, which is usually Visa or Mastercard. This information is then communicated to the payment processor, who informs the payment gateway of the system.
STEP 6: At the end, the payment gateway communicates the transaction status to the merchant’s website, which is displayed on the screen of the customer. Here is the process where the payment procedure comes to an end.
How Can One Establish A Payment Gateway:
Let us understand how this step-by-step guide to a customer payment gateway:
Investigate and Brainstorm: Before starting the development of your payment gateway, it’s important to first clarify the payment integration platform and business goals you want to achieve with it. Identify your target audience and perform comprehensive research to ensure the viability of the product. After completing these steps, you can proceed with the creation process.
Developing Infrastructure: This is a secure payment processing foundation. In this process, a specialized team should be engaged to build essential systems and networks that ensure the safe and efficient authorization and settlement of payments. This is the root of your payment gateway, and you should develop reputed payment gateway software.
Counter Fraud measure implementation: In this online payment process, security is something that the customers will keep in priority and will demand from you and it is your responsibility to ensure that your customer feels safe while consuming your payment gateway. Implementing this mechanism is very crucial as it ensures the safety of your customers and your customers don’t lose faith in you.
Acquisition of licences and certificates: The launch of a payment gateway requires fulfilling various competence requirements, which will be facilitated through the assistance of a payment gateway development service provider. So, before launching a payment gateway you will need to obtain all the essential certificates, which you can get with the help of the payment gateway development service company.
Payment Processing Network Integration: To process the transaction efficiently, your gateway needs to establish communication with the payment processing network in order to gain authorization and complete settlements.
Testing and Launching your Payment Gateway: Before your digital payment solution is launched to the public, it is very essential to ensure that it is functioning properly or not. This is known as the pre-testing stage where the payment gateway is tested on some sections of the people and it is ensured that the functioning is done in a secure way and no complications are included in this process.
These are some of the examples of the programming language that the developers prefer for creating a payment gateway:
Python, PHP, Java, Ruby, C++, C#
How Creating A Payment Gateway Can Benefit Your Business?
Digital transactions and Globalisation work hand in hand with today’s generation. Enterprises and Start-up can benefit from the development of a payment gateway by leveraging its advantages, including:
When utilizing E-payment, third-party payment gateways like PayPal and Stripe, there is a fee associated with each transaction that can add up to a substantial sum over time. In contrast, investing in the development of a custom payment gateway involves a one-time cost for the initial investment, but eliminates the need for ongoing fees for payment processing services.
Journey of Stream-Lined Payment
By developing a custom payment gateway, you can reduce costs by avoiding fees and earning passive income by offering the use of your gateway to other merchants. By doing so, you can collect a fee of 2-3% on each transaction made through the gateway.
Savings for up to 3% on Every Transaction
One of the advantages of a custom payment gateway is that you don’t have to pay the gateway fee you usually would, this means that you will be able to save up to 3% on every transaction.
Refund and Customer Service Management
With our payment gateway, businesses can avoid the frustration of delayed claim-settlement times during refund processing. Our platform offers real-time tracking of refunds, giving businesses the peace of mind and the efficiency they need.
Complying With Industry Standards For Payment Security:
Creating a payment gateway is a complex process that requires a strong focus on security. The reason for this is simple: the payment gateway handles sensitive information such as credit card numbers, billing addresses, and other personal data. A breach of this information can result in serious financial losses, legal consequences, and harm to the reputation of the payment gateway provider.
To address these challenges, here are some best practices for ensuring the security of the payment gateway:
User-Secure Transmission Protocols: All information transmitted between the payment gateway, and its users should be encrypted. The most commonly used protocol is SSL(Secure Sockets Layer) and TLS(Transport Layer Security). These protocols encrypt the data being transmitted, making it unreadable to anyone who intercepts it.
Implement fraud-detection and prevention measures: Fraudulent activity is a major concern for payment gateway providers. To reduce the risk of fraud, it’s important to implement measures such as address verification, CVV checks, and real-time monitoring of transactions.
Compliance with the Payment Card Industry Data security standards: There are some sets of data security that must be followed by certain data entities that handle credit card information. To ensure compliance, payment gateway providers must follow strict security protocols and should undergo regular audits.
Regularly update security measures: Technology and cyber threats are constantly evolving. It’s important to regularly review and update the security measures in place to ensure that the payment gateway remains secure.
Security is the major challenge which is faced by payment gateway providers, and it is necessary to take proper steps to ensure that the payment gateway is secure. Based on the positioning of the payment gateway, these can be classified into three gateways:
Self-Hosted Payment Gateways: With self-hosted payment gateways, the payment processing takes place on the merchant’s own server, but the information is sent to the third-party gateway for authentication. This approach gives merchants greater control over the customer’s payment experience compared to hosted gateways.
API- Hosted Payment Gateways: These payment gateways are the most sought after by merchants of all sizes because in this the merchants have complete control of buying and payment experience.
Features That Everyone Wants In Their Payment Gateway:
In a day, there are thousands of transactions, the payment gateway must be quick, efficient, and secure enough to carry those transactions smoothly, without any complication. There are numerous payment gateway features that everyone wants in their company, Such as:
Acceptance of All Payment Options
Earlier debit and credit cards were the only modes of digital payment available. With the increase in the use of mobile wallets and other digital payment options, customers expect merchants to provide them with most of the payment options.
Fraud Detection Mechanism
Fraud-detection mechanism is the crucially important feature of the payment gateway, as it helps in payment fraud prevention. Nowadays, fraud in digital transactions is very common, and this is the main concern for users as well.
Customised checkout solutions are looking for options that offer real-time claim settlement. Security should not be compromised when finding the best approach to real-time payment.
Support for Multiple Currencies
Geographical location cannot be the boundary for digital transactions, so consumers in multiple countries could use your consumer gateway. That’s why the use of a multi-currency payment gateway makes the gateway as inclusive as possible.
Who can be benefited from using a payment gateway:
According to Wikipedia, The payment gateway has proved to be a benefit for many industries. These are some of the industries which get benefited from using the payment gateway:
Information technology companies(IT): The payment integration platform has benefited information technology, by allowing the IT company to reach a larger audience and increasing revenue by enabling online transactions. Payment gateways provide a secure, fast, and convenient checkout process for customers, which helps in improving the overall customer experience. Payment gateways use advanced technology measures such as encryption, fraud detection, and secure storage for sensitive information, which assures the protection of customer and information data.
Huge and influential merchants: Earlier there was a requirement for a third party in the payment procedure, but this technology has removed the third-party involvement in this procedure. Now the payment can be done smoothly between the sender and the receiver.
Custom functionality: The advantage of creating your own payment gateway is the flexibility it provides. You can customize it with the features you need without enquiring about the high fees. This can be especially beneficial if you need need to process transactions in multiple currencies. By creating your own gateway, you have the freedom to make it work for you without any restrictions.
Reduced fees: Developing your own payment gateway can result in significant cost savings as compared to using third-party options. Third-party payment options often charge high registration and usage fees, as well as fees for each transaction, which can add up to substitutional expenses over time. By creating your own gateway, you can reduce this money and have savings also.
Finally, the cost is the key consideration, as both the development and maintenance of a payment gateway can be expensive. Careful planning and budgeting are essential to ensure that the payment gateway is financially feasible and meets the needs of your business. By working with an experienced and trusted payment provider gateway, you can minimize the cost and ensure that the payment gateway is profitable and sustainable for the business.
Creating a payment gateway requires a strategic and comprehensive approach, taking into account the main technical, business, and user-experience factors. By focusing on these key factors and working with a trusted provider, you can establish a trusted and reliable payment gateway that will support the growth and success of your business.