Buying all you need at any time without leaving your cozy home has recently transformed from sensational news into an everyday routine. You could hardly find a person who has never tried online shopping.
Although it is fast and convenient, there is one factor that makes the people abandon their virtual carts in the process of buying in e-stores – transaction security. Want your customers’ checkout go as smoothly as possible? Take care of secured and easy-to-use payment gateway for your e-commerce business!
What is a payment gateway?
A payment gateway is what connects your e-store with the bank. The service can perform several types of transactions:
- authorization – checking whether there is enough money on the customer’s balance to buy the product;
- capture – authorized payment processing and sending the money to the merchant’s account;
- sale – is authorizing a buyer and then capturing (or not) the money. It is usually used for instant purchases, for example, subscription;
- refund – returning the money if the order is canceled;
- void – same as a refund, but applied in a case where there wasn’t processed capture
How does payment gateway work in e-commerce?
If the fact that payment gateways make all the online payments possible is not enough for you, here are some more functions of this service. The gateways are able to perform complex actions concerning money transactions in just a couple of seconds.
A payment gateway encrypts the important data like credit card number, CVV, expiration date to prevent from various online frauds and make all the transactions secure.
The infrastructure of any payment gateway has actually a more complicated structure than what the customers can see for 3-4 seconds while their payment is being processed.
Payment gateway vs payment processor vs merchant account
To make things as clear as a bell, let’s examine the difference between a payment gateway, payment processor, and how they are connected to the merchant account.
A payment gateway connects the transactions on your e-commerce website with the payment processor, which receives money from your buyer’s account. In the real world, the payment gateway corresponds to a terminal in bricks-and-mortar shops or cafes. It provides with the opportunity to pass the transactional information from the buyer to the merchant.
A payment processor links the customer’s (issuing) bank with your bank. The payment processor is also called a financial institution that works in the background. It quickly passes the information between the banks, keeping it secure and almost immediate for the customer.
A merchant account is a type of bank account. It conducts authorization in order to access online payments via debit or credit cards. You cannot process transactions in your online store without this account.