Payment gateways vary in nature and make up. They may come from different providers but they all follow the same broad approach.
1. Collection: This is the point at which your customer navigates to the check out on your website and enters their credit or debit card details. The payment page will then pass the data to the payment services provider.
2. Transfer: Once the details have been entered, the payment gateway securely transfers your customer’s details to your payment processor or merchant bank.
3. Verification and authorization: From here, the details make their way through to the customer’s issuing bank which will signal whether or not that person has enough funds. That data works its way all the way back to inform the customer about whether their payment has been approved or not.
Related: Omnichannel payments
This process will include several different parties.
1. Merchant account: This is a particular type of account used to accept credit or debit card payments. Funds will be temporarily held here before being passed on to your own business bank account.
2. Payment processor: They provide services to businesses to help you get paid. They may provide both a merchant account and a payment gateway to help you process and manage all your payments.
3. The issuing bank: This will be the bank of the card holder. They will have to authorize the payments and send money.
Each of these parties will play a role in managing the payments and transferring data from the customer into your bank account. It’s a complex process, involving many different parties, performing many different tasks. The important thing is that from the outside, everything looks quick and simple. Your customer selects a product, makes a payment and quickly learns if it has been accepted. The quicker that happens, the better it is for your business.