Now that we’re in the age of the internet, more and more merchants are making the smart decision to bring their business online. In order to do this, though, they need a way of accepting credit card payments through their websites just as they would be able to at their in-person storefronts. This is done through a payment gateway, a service that allows credit card transactions to be accepted.
A gateway works similarly to a payment processor, in the sense that when a credit card transaction is made, they pass on the transaction information to acquiring banks (or the banks that the merchant or business belong to) and also communicate the response from an issuing bank (the customer’s bank), letting the merchant know whether the credit card has been approved or declined.
This process takes a matter of seconds, and it occurs when a customer clicks on “confirm” or “submit order” or “purchase” on a merchant’s website. As the page loads a confirmation (or occasionally an error page when a card is declined by the issuing bank), the entire communication process that the gateway facilitates is taking place. In the event a card is declined, it may be due to insufficient funds, or it may be due to information having been inputted incorrectly by the customer in the information fields provided by the website. The information being incorrect is discovered through the gateway as well, as it has the ability to confirm correct information is being provided and the transaction is secure.
The gateway keeps a business’ customer’s credit card information secure and safe, as per industry standards and protocol. This is done through various tools that gateway services provide, one of which being the ability to verify addresses being provided by the customer, as well as using IP addresses and tracking to ensure that the charge is coming from a location which makes sense for the customer (which ideally can prevent fraudulent charges or stolen card information from being used by somebody besides the customer who the card originally belonged to).
Many businesses find that the online checkout process is where they are most likely to lose the customer, with half of customers saying that they would cancel their transaction if their preferred method of payment was not available. Many customers also prefer the ease of a one-click checkout, so payment gateways that offer connections to services such as Paypal or Amazon Payments can auto-populate a customer’s saved address and card information so they can check out faster.
Some gateway services, such as one called Stripe, allow customers to shop directly from tweets or other social media posts without being redirected (as the loading time in a redirecting is again, oftentimes where the customer is lost).
The faster, easier to use, and the more secure a gateway is, the better it is for the customer and the more likely they are to trust an online merchant with their credit card information.