subject: Importance Of Online Payment Gateway [print this page] What is Payment Gateway?
It a point in the network or a service provider that allows internet user to enter into other network and pay online for their purchases from online stores via websites.
It is similar to POS as present in the physical shops. POS is Point Of Sale which is a terminal being found at each and every retail shop made up of bricks. This service is provided by various banks like Citibank etc.
The main issue concerned with Payment Gateway is Security i.e. encrypting the crucial and sensitive credit card details like credit card numbers of the shopper and sending the same from shopper to merchant and from merchant to payment processor.
The linking of online shopping store with payment gateway is called Payment Gateway Integration.
Procedure of Payment Gateway:
The customer after shopping submits the order and the same is sent in an encrypted form to the merchants web server. The SSL encryption takes place in which there is assurance of secure data transmission.
The same is then sent to Payment Gateway.
These transaction details are then passed to merchants acquiring bank.
The acquiring banks then send the details to issuing bank i.e. the bank that has issued credit card to the customer.
After receiving the details, issuing bank sends the response to the online payment gateway that whether the payment has been accepted or not. If not accepted, the reason is also sent in the response.
The same is then passed to payment gateway and hence to the merchants server.
The response is finally sent to customer in an encrypted form to intimate the customer whether his order has been placed successfully or not.
At the end, the issuing bank deposits the money in the account of merchant.
Why Online Payment Gateway is needed?
It is an essential part as without this, payment of goods and services purchased online cannot be made.
It augments the use of E-Commerce i.e. buying and selling of goods via internet.
Advantages:
Save in time and effort spent while standing in queues for making payment.
The person can do the online payment anytime and from anywhere. There is the requirement of computer, internet connection and the credit card.
Automatic tax calculation before making the transaction.
Disadvantages:
Security threats by hackers.
Breakdown of internet connection or computer.
by: Vikrant Gupta
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