What is a Payment Gateway, and How will it Help My Business?

If you’ve just set up a small business or have already established one, and you’re planning to accept credit card payments, it’s important to familiarize yourself with the process. One of the first things you’ll require is a safe and reliable payment gateway. Though it appears complicated, be assured, it’s much simpler than you would probably imagine.

Payment Gateway Explained

A payment gateway is what connects an Internet website to the traditional banking network. They can be compared to the traditional cash register and like it, they have to be efficient, safe and easy to use. There are different types of payment gateways: Hosted, self-hosted, API-hosted and local bank integrated.

How payment gateways work:

  • A customer visits an e-commerce site, selects products or services and places the order in a shopping cart.
  • The customer enters their payment information including their credit card details.
  • A CNP (card-not-present) transaction is processed and encrypted via an SSL (secure socket layer) encryption.
  • Encrypted data is sent to the company that processes such transactions.
  • All such transactions are directed to the appropriate credit card association (e.g Visa, MasterCard, American Express, etc.).
  • Transaction fees are levied by the association.
  • The transaction is either approved or declined, and the parties to the transaction are notified.
  • If the transaction is approved, then it is authorized and the issuing bank returns this permission to all the parties in this processing network, allowing the transaction to proceed.

This entire process happens within the space of no more than three seconds.

The merchant submits authorizations in a batch to the merchant bank and the funds are then deposited in the appropriate accounts.

Benefits for Small Businesses

Online businesses and e-commerce websites are a common target for fraudsters and scammers. This can seriously damage your brand and business reputation, make your site unpopular, fetch unfavorable reviews and damage your revenue earning capacity.

Some of the crucial benefits of a reliable, easy and safe payment gateway:

  • Reduces the severity and frequency of credit card frauds
  • Increases security of payments and user data
  • Builds employee trust
  • Major gateways use high-level 128-bit SSL encryption
  • Provides more flexibility: credit and debit cards and also other online payment methods
  • Keeps your business abreast of customer expectations and familiar ways of doing business
  • Businesses can create new online portal that features their brand, services and products
  • Rapid fund-transfer into your account
  • Helps to manage and strategize your cash flow
  • Enhances customer satisfaction and experience
  • Offers options to remember customer card details for faster checkout
  • Saves you time and money wasted in depositing checks, keeping track of them, monitoring and tracking cash payments
  • Provides more safety as you don’t have to store cash
  • Reduces employee theft and fraud
  • Enables recurring transactions to be charged automatically

For more information on what a Payment Gateway is and how it will help your business, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com

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