How Is A Payment Gateway Useful?
E-commerce is a pretty famous word in the digital world. It’s lucrative functions, and helpful features have brought a difference in the business arena. One well-known feature is a payment gateway, but there are a couple of merchants that do not sell their products using the payment gateway. Before we check the merit of using the payment gateway, let’s refresh our memories with an anecdote.
Remember when we were young and found stationery our most prized possession? Our only way to buy more stationery was to walk to the closet shop and spend our 5 pennies on any eye-candy we like. As times advanced, stationeries are now available at the click of the fingers via GPay, Amazon Pay, and others. Today, very few of us carry cash with us while going shopping for anything – from small necessities to large appliances. So now, when we go back to our childhood memory and come back to reality, we realise that we’re more secure about our money today!
Anyway, now instead of going into the earlier memory of our life, let’s check how the payment gateway is useful to e-commerce, and the non-e-commerce industry.
It is essential to know what is a payment gateway and how it shaped the e-commerce system. After that, we’ll probably be able to understand answers to the most asked questions like;
- Is it secure?
- Should we consider it for our store?
- What is the policy of the payment method?
- How to integrate it with our technology platform?
What Are The Payment Gateways And Its Role?
So whenever we make a payment, we’re redirected to a secure payment gateway to complete the online transaction. We might have seen that Amazon or other e-commerce websites have a secure payment gateway, like Razorpay or others.
In simple terms, it is the third party which is handling the authentication of credit cards and does the successful transaction by using a card processor. All this process has been done on behalf of the Merchant. Once the payment gateway has the details of the transaction, they redirect the user back to the merchant’s platform.
Credit and debit card, eCheck and digital or virtual currency (bitcoin) all manage the transaction from the payment gateway. You won’t be able to charge your customer without the payment gateway. Probably, many sellers are aware of the POS ( Point Of Sale ), and payment gateway works with the same methodology.
How Does The Payment Gateway Work?
Before we go in-depth, let us see how it seems to a customer. Usually, they come to the website, add the product into the cart, and go to the checkout page. They fill the essential details including their cards, and they sit back until the system does the complete process. In a couple of seconds, the payment is debited from their account and credited to the merchant’s account. Multiple steps happen in the background.
In the first step, the system collects all the information of the order and submits it to the merchant; also it is highly encrypted. In the second step, the data has been sent to the merchants’ processor so they can simply process the transaction. After the second step, now your processor is ready to validate the card. They now check the internal charges on every different card and also validate the transaction. Here they validate the fund and the expiration date. Once they perform all these steps, the transaction is authorised in its fourth step. During the authorization, if there is no issue, then the user transaction is approved and it redirects back to the merchant store or system. Once the transaction authorization is done we will get the payment in our account.
How Secure Is The Payment Gateway?
There are certain protocols which the payment gateway company needs to follow. Also, as a merchant, you should make sure that all those protocols are there or not. If any of the protocols are missing, then you must ensure that the security of the payment gateway doesn’t get compromised.
TLS Encryption: Data security on e-commerce begins when the user comes to any page of a website. The TLS certificate gives the confidence to your valuable customer for the data which they are going to share between server and their browser is secure. Also, as a customer, you are easily able to know that the site is having the TLS or not. If the URL uses “https” then it is the TLS. Here “S” stands for the Security by default it is having the HTPP which is marked as “non-secure”.
PCI-DSS Compliance: In 2006, all major credit card providers ( American Express, Visa, MasterCard, and Discover ) created a committee for guiding the principle of online security over the world. They have standardized some of the policy and that should be followed by every payment gateway. Merchants are not allowed to store the sensitive cardholder data on the website. They need to use the firewall on their network or PC Encryption should be for the card details. many more rules and regulations are there.
Apart from this, PCI has multiple levels and at that level, level 1 is the highest compliance. PCI compliance is certainly a complicated and difficult process but it is good for the process as the customer payment data is at the stake. While choosing the payment gateway to make sure that your payment gateway must have a good PCI Level.
Tokenization: It is a very well known method because it sounds really good and secure. Tokenization is encrypting the 16 digit card number and other details in the form of “Token”. Also, this is safe to store the data in the website database. If the security of the system has been compromised then also this token can not be possible to reverse the engineering because they need to know the logic of the encryption of card number. That logic is not available publicly so it is safer than expected.
Two-Factor Authentication: When you get something extra you always like that. Here it is the same thing in the context of security. This will give you the additional security for your e-commerce of store. 2FA is not the new technology but it is very famous nowadays because, in 2011, Google announced it as heightening online security for its payment services. Here the user will do the ‘Authorisation’. It is the data which only real user is knowing such as OPT/CVV/PIN. The bank and the payment gateway are taking the confirmation of initiated payment which is raised by the right user or not and for that, they will re-confirm the CVV/PIN/OTP.
Is It Needed For My Store?
Well, it is completely dependent on your profit satisfaction. If you are fine with cash on delivery option on your store and you feel that it is allowing me to rotate my funds well in the business then probably you do not need the payment gateway but in this case, you need to always put your fund first and then you will get the profit.
Well, if you are taking the payment first while selling your product online, then you are getting the money and profit first before your product is delivered to the customer. Here you can have the fund first. Also, if you are having recurring services or goods then probably the subscription providing payment gateway is more useful for you.
What Is The Policy Of The Payment Method?
Every payment method has a different policy. Also, they may have some extra security layers to prevent the fraud transaction. The payment methods are always taking certain charges while you make the payment or withdraw the payment. this policy is also different. Based on my knowledge and experience I am sharing my thoughts on a couple of popular payment methods.
Stripe: It is one of the most popular payment gateways in this world from 2011. It is having the adaptive API. there are no hidden charges apart from their processing fees. processing charges are flat 2.9% + $0.30 for domestic transactions. These fees are pretty standard for most payment methods. It is ideal for international merchants. it is offering the subscription payment method as well. The API document is quite impressive as well which helps your developer to integrate the payment method. On the other hand, it was observed that it is not suitable for high-risk industries.
Authorize.net: It was established in 1996. It has major merchants from the USA only. Its processing fee is 2.9% on transactions with an additional $0.30 per transaction for their “all-in-one” payment provider option. It has a wide range of currencies. It is almost provided in all the currencies. It is having great security and this is the main reason why they are having good captures on the merchants. for the optional merchant account, they have high flat-rate pricing which we consider as cons of it.
PayPal: It was founded in 1999. It is free for the buyers and due to that it is very well known the fees needed to be paid by merchants only. It is offering the on-site payment option where users can leave the website and make the payment from their credit cards. The fees are 2.9% per transaction, with no monthly fees. It is a great choice for the low volume merchant, but it is not good for the high-risk industry also not having great customer support.
Apart from the above-mentioned payment methods, there are many more payment methods such as Amazon pay, OrangePay,2Checkout, BlueSnap, Klarna, Braintree, Razorpay etc.
All are having their own merits and demerits you need to check bases on your volume which is very less expensive and highly secured.
How To Integrate It With My Technology Platform?
Well, nowadays API has been provided by all the payment gateways. You can hire API integration developers or payment gateway developers to configure the API with your System. As the payment gateways are now providing the API with the great document it is very easy to configure it in any system with any technology. Even developers can find the library in the GitHub based on their technologies. As we are a web development company, we have done many API integrations for the payment method. Also, we have created extensive plugins in WordPress as well. We have developed plugins not for the e-commerce industry but for those people as well which do not belong to the e-commerce industry. If you are looking for the payment gateway integration then you can approach us for a free quote here.
In a nutshell, if you can raise your business by making the online payment with security, then why should we not increase the business. However, it is indeed going to cost you but if we earn something more than what is wrong to pay the little fees to the third-party payment gateways.