The Comprehensive Guide to Payment Gateways

Your payment gateway will link you and your customer together to ensure you can complete a transaction. The gateway you use will collect the customer’s card data and encrypt it before moving it to your payment processor. It will then come back to you through the gateway as the processor contacts the cardholder’s bank to confirm or decline the transaction.

You must have a payment gateway that helps you collect payments and also move them to your merchant bank account. Your gateway also needs to be easy to manage and run. Each gateway also includes different charges for use, although those values can change over how you incorporate your work through the gateway. Be aware of how you’re managing your gateway when finding a suitable solution for your work plans.

The General Gateway Effort

A payment gateway will use a useful system that identifies the customer’s order and safely transmit the data to a payment processor. The gateway will encrypt and send the order data to a merchant bank’s processor. The processor then moves it through a credit card interchange, where it will receive a message from the issuing bank if the transaction can continue. The gateway will forward the response back to the point of sale or the website where the transaction started. The customer will then send the funds from one’s account to the merchant’s account.

The merchant account will then clear and settle all its transactions after the business day ends. The merchant could get its funds within 24 to 48 hours in some cases. But the gateway will be responsible for moving the funds.

Think of the payment gateway as the signal-keeper and protector. The gateway encrypts the data and transmits the necessary signals for a deal.

Common Gateway Formats

You can use one of many gateway formats when handling your transactions:

  • Redirect – A redirect gateway will move a customer from a website to a separate site that will complete the transaction. It is an easy to implement solution, but your business won’t have as much control over the transaction.
  • On-Site – You can also use an on-site approach to handling payments. An on-site gateway lets you handle the gateway and processing efforts on your server. The system is useful for more massive businesses that have enough infrastructure.
  • Hybrid – You could also include a hybrid solution where your checkout works on-site, but the payment processing is off-site. You will collect all the payment info, but you are still using an off-site gateway that will handle all the on-page data you collect.

What Will You Pay?

A payment gateway will include various charges:

  • A monthly fee to access the gateway
  • A membership fee
  • Setup fee
  • Chargeback fee
  • Charges for each transaction; this point is more common for when someone uses a merchant account while accessing a gateway

The specific fees you’ll spend will vary surrounding whoever you contact for help.

You could also spend extra on a merchant service fee if you use a gateway connected to a specific provider. Some merchant service providers will offer discounts if you use their gateways, while others charge extra if you don’t use their merchant accounts.

Security Measures

A payment gateway will also use a secure layout to handle your data well. A gateway can use encryption to secure customer data.

Tokenization may also work in some cases. The tokenization process produces a randomized series of characters for each account. The gateway and processor you hire are the only ones that can read those characters. The system reduces the amount of data you’ll store on your website, keeping you PCI-compliant.

What To Consider When Finding a Gateway

Payment gateways are convenient for many uses, but you must also look at how you can find a gateway you can trust. Here are a few things to see when finding a useful gateway for your work needs:

  1. Integrated Checkout

Some gateways come with integrated checkout features. The checkout helps you post a platform where customers can pay for their orders. It can include a sensible template where customers can safely enter data. You could also customize the checkout layout.

  1. Security Points

All gateways come with different security functions. Some will encrypt data, while others use tokenization. Whatever you use, the gateway should provide a safe approach to managing your customers’ data.

  1. Is a Merchant Account Needed?

Some payment gateways require you to sign up for a merchant account for access. A system that includes a merchant account is convenient for more massive businesses, but it can also be cost-prohibitive in some situations.

  1. General Terms For Use

A processor will have unique terms for use, including rules on what you can do with your gateway, how much you’ll spend in certain fees, and various other aspects of work. All systems will vary over how they operate, so look well at what you are finding when hiring a useful gateway.

  1. Refund Options

A gateway should include refund options. The system can include refunds for purchases made within a proper time frame. Some gateways may not support refunds if you’ve already settled some transactions.

  1. Payout System

Your gateway will help you collect the money you’re owed from your transactions. But the timeframe for when you’ll be paid will vary surrounding how quickly the gateway can help you settle your funds. Some gateways will get your funds ready in about 24 to 48 hours. Others might spend up to a week to get your payments ready. Look for a solution that offers a timeframe you’re comfortable with, especially if you operate on short profit margins and need your funds sooner.

Be aware of how you’re hiring a payment gateway you can trust. Gateways come with many features for your convenience, and they can be critical for helping you accept payments. But anything you use should be sensible and useful for whatever work plans you hold.

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