Top Insights Small Businesses Owners Need to Have about Payments Gateways

Payment gateways become a crucial part of websites dealing with online transactions. These gateways form a sensitive part of small businesses because these can help the owners break and make customer relations. This article will give you all the insights regarding payment gateways that you need to have as a small business owner encrypt sensitive details.

What Is A Payment Gateway?

A software application that payment service providers use to process payment for online purchases originating on a merchant’s website. It acts as an interface between the merchant’s website and a payment processing bank known mostly as an acquirer. This gateway can be used for many types of payment methods. The major function of any payment gateway is to encrypt sensitive details and conduct a secure online payment transaction. 

In simple words, the answer to what is a payment gateway is that it is a portal that helps the customer to initiate payment transactions by connecting the bank account to the relevant payment processor.’ Following are some kinds of payment services authorized by most payment gateways:

  • Internet banking
  • UPI
  • Debit cards
  • Credit cards
  • Digital wallets

One of the major reasons why small business owners must rely on payment gateways is that these gateways ensure secure payment transactions and take care of sensitive data. Furthermore, the payment gateways will ease cross-border transactions and will allow the owners to operate their businesses at an international level. 

Who is involved in payment through payment gateways

Before we dive into a step-wise guide on how the payment gateways work to upgrade our understanding of what is a payment gateway it is important to know the four key parties that play the role in any payment gateway:

  1. The buyer
  2. The merchant
  3. The issuing bank
  4. The acquiring bank

Step-wise guide on how the payment gateways work

Now that we understand what is a payment gateway, here is how payment gateways work:

  • When a customer completes the shopping process s/he is redirected towards a new page that connects his/her to the payment gateway.
  • Here the customer is required to choose the payment service from the provided services through which s/he is willing to initiate the transaction. 
  • The crucial task of encryption is then attempted by the payment gateway to keep all the sensitive information hidden and safe.
  • After encryption, most payment gateways also run a fraud-check under the protocol of transport layer security.
  • Once the fraud-check is attempted and successful, a safe connection is built.
  • This safe connection then enables the payment processor to connect the buyer’s account with the merchant’s account. Once connected, the transaction is initiated. 
  • In case the merchant’s account turns down the payment, the buyer is redirected and suggested to use any other payment service option to initiate the transaction again.  

Once successful the customer receives a final notification informing him/her that the transaction has been completed and the order is thereby successfully placed.

Types of Payment Gateways

What must be known beyond acquiring the knowledge about ‘what is a payment gateway’ is the types of payment gateways available for small business owners to choose from. Following are three major types of payment gateways that one can research before making the right choice:

  1. Redirection  
  2. On-site checkout, off-site payment. 
  3. On-site checkout and payment. 

Paypal, amazon pay, pay, square, stripe, apple pay, and are some of the popular payment gateways used by many small business owners at present. When you understand what is a payment gateway, you will note that all these payment gateways provide a secure and smooth payment process. Some business owners also believe in using multiple payment gateways to eliminate redundancy. In case the window of one of your payment gateway is down, the other will save your business the trouble in such scenarios. The key is to understand the preferred payment methods of your target audience and the limitations and benefits that are attached to the payment gateways that you wish to use encrypt sensitive details.

Factors to consider before choosing a payment gateway

Once you know how payment gateway works, and you start considering it for your small business, you must understand every detail of it. Following are some things to consider before you select the appropriate/suitable payment gateway for your business:

  • Be sure to choose the gateway that supports the currencies of the countries you want to work in/with.
  • Understand the service policy well, and check if the payment gateway imposes any additional fees.
  • Make sure that the selected payment gateway supports new payment methods. 
  • Understand and research well on the expertise of the payment gateway in fraud management.

Therefore, with the answer to what is a payment gateway, the technical factors definitely come into play. No matter what payment gateway you choose for your small business technical issues are inevitable, what is thereby advised is to understand the customer support policy of the payment gateway that you wish to choose. A good customer support policy will help you with easy identification and resolution of technical issues. Check beforehand if the payment gateway that you wish to choose for your business offers phone or chat support. This will help you with quick solutions for otherwise inevitable technical issues that may arise. Choosing a payment gateway becomes a crucial part of any business because a smooth and secure functioning of that can set you up for success encrypt sensitive details.

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