A payment processing gateway (PPG) is the bridge between the buyer’s bank account and the merchant’s banking provider during an online business transaction. A PPG facilitates card-not-present (CNP) transactions. These occur when physical interaction between the transacting parties is non-existent. The function of PPGs is to ensure online transactions are successful, thus working as a virtual point of sale station.
Functionalities
The following are the functionalities of a payment processing gateway:
Payment Processing
Online payment processing platforms facilitate several steps guided by protocols to verify and validate the transaction before checking out. First, the payment processor sends data from your debit or credit card to the merchant’s acquirer bank for verification. The acquirer bank confirms with the seller’s eCommerce site to check if the cost of goods is correctly stated from your end. The acquirer bank then communicates with your issuer banking provider, thus establishing sufficient cash or credit in your cards. Finally, there is the communication of acceptance for the payment or decline if your available balance is insufficient for the goods in your cart.
The communication from the activity of the payment processing gateway gets to you through a special application programmable interface set up by the merchant. The API is accessible via a web browser page or application software installed on your networked device. Once you confirm that the transaction can go ahead, money exchanges hands from your bank to the merchant acquirer’s account.
Payment Gateway
The payment gateway creates a link between the eCommerce API and the payment processor to oversee the transaction’s execution. It plays several functions that ensure the merchant receives money for items you want to acquire before settling the trade.
First, the gateway undertakes the data encryption functionality. It uses a public key to make your card details unreadable to unauthorized users. Your credit data includes card number, balance, and name, which must only be readable to the merchant’s bank and your banking provider. The payment gateway makes the private decryption key available to the two systems.
Secondly, the payment gateway is responsible for data transmission between the API accessible on your end to the server controlling the eCommerce site. The communication channel is useful in ensuring that the customer and product details are accurate for initiating the billing process.
Finally, the functionality ensures an accurate value deduction from your debit or credit card equal to the items purchased. Here, your data is not included since a digital signature suffices, which helps validate the transaction based on your authentication as the buyer. A secure socket layer establishes between the web browser where you check out and the merchant server keeps your details hidden. It facilitates customer authentication for closing the transaction with approval from the payment processor.
Characteristics to Look For
The following are characteristics of a reliable PPG provider:
Diversity of Payment Options
The diversity of payment solutions is important because it allows you to choose alternative ways to settle the product costs. Good platforms allow credit or debit card methods and automated clearing house or electronic fund transfer options depending on your geolocation.
Full Automation
The platforms automatically request your card data and collect product data from the merchant before closing the trade. The API has few requests to validate the transaction unless there is a need for an alternative payment method if you have insufficient funds.
Integration
PPGs integrate innovative payment concepts such as crypto and customer discounts available at the click of your mouse. Such new functionalities require small protocol changes before you can enjoy great trading experiences on your preferred eCommerce site.
Remarks
The benefits of PPGs, such as security of customer data and streamlined online business transactions, enable a healthy client-merchant relationship. The payment processing gateway creates a trustworthy bridge. It helps achieve commercial goals while protecting customers from fraudulent data acquisition and misuse.
