Payment Gateway Integration
Payment Gateway: Overview
A Payment Gateway Integration is a unit of transaction processing software that collects, saves, and sends consumer credit card data to the acquirer. The customer is then informed of the payment acceptance or decline.
To put it another way, the payment gateway serves as a go-between for customers and businesses.
An online payment gateway can make it easier for merchants to receive card payments by serving as an interface between their website and their acquirer.
A payment gateway encrypts the sensitive payment information of the client when it is transmitted from the merchant to the acquirer and ultimately the issuer.
The gateway adheres to the PCI-DSS compliance standard’s tight guidelines for data security, which also involve yearly audits and recertifications to guarantee the standard’s validity.
Payment Gateway Integration: Working
As we’ve seen a brief overview of payment gateway and why is it a must for the merchants, now let’s go a bit deep in the working of the gateway and know how it actually works. In this we’ll see step by step processing of the payment, the steps are as follows:
Step 1.
The customer moves on to the website’s payment page after choosing the goods or services they wish to purchase.
The majority of payment gateways provide a variety of checkout page alternatives.
For your payment page, the payment gateway provides options that are tailored to your company’s requirements.
Step 2.
On the payment page, the consumer fills their credit or debit card information, including the name of the cardholder, card number, expiration date, and card verification value (CVV) number.
Depending on the merchant’s selected integration, this information is securely sent to the payment gateway–hosted payment page, server-to-server integration, or client-side encryption.
Step 3.
Prior to delivering the card data to the acquirer, the payment gateway encrypts the card information and does fraud checks.
Step 4.
The card schemes do additional fraud checks on the data that the acquirer securely submits to them, and they then pass the payment data to the issuer for payment authorization.
Step 5.
Authorization – After conducting the appropriate fraud screening, which includes validating the transaction information and making sure the cardholder has enough money to make the purchase and/or that the bank account is legitimate, the issuer authorizes the transaction.
The acquirer receives the issuer’s approved or refused payment notification from the card schemes.
Step 6.
The payment gateway receives the approval or deny notification from the acquirer and relays it to the merchant.
Depending on the message, the merchant may either provide a page for the customer to confirm their purchase or request an alternative form of payment.
Step 7.
Card capture requests allow the merchant to “capture” the amount of the purchase from the customer to the merchant account after the authorization process is complete.
Although the money is reserved and the customer’s card limit is decreased, they won’t be charged until the capture has taken place.
Step 8.
Settlement: If the transaction is accepted, the acquirer will receive the payment amount from the issuing bank and deposit it in the merchant account as “on hold”.
Depending on the agreement the business has with their payment service provider, the actual settlement date may or may not vary.
A Payment Gateway Integration has advantages for both merchants and customers, even if the majority of its operations take place in the background during the payment process.
Each of the aforementioned processes can occur instantly or after a brief delay.
Payment Gateway: Security Features
Payment gateways’ top priorities include security, compliance, and handling private payment card data.
However, as we discussed above, just as digitalization has made eCommerce sales successful, it has also made online businesses and their clients more exposed to hackers.
The global cost of online payment fraud is projected to reach $48 billion by 2023, making payment gateway security all the more vital.
Having the appropriate payment gateway on your side is a terrific place to begin when investing in reliable risk management solutions that can assist in identifying and discouraging online fraudulent transactions.
To assist you in selecting the best payment gateway for your eCommerce shop, we’ve listed a few of the security precautions used by each.
Payment Card Industry Security Standard (PCI DSS) compliance:
A group of international security guidelines known as PCI DSS are used by card schemes. The PCI DSS was created to protect debit and credit card transactions and stop the misuse of cardholders’ private data.
To effectively prevent fraud, companies that receive, store, process, and send sensitive card information must be PCI compliant.
Tokenisation:
Payment gateways also utilize tokenisation to safeguard users’ credit card information. During the transaction, a token—a distinctive identifier—replaces the private bank card information.
In other words, if someone tries to intercept your data before it gets to the safe decryption endpoint, they will only see an incomprehensible form.
This enables customers to just enter their card information once, eliminating the need to enter the same information again for subsequent transactions.
Because there is one less step for customers to complete during checkout on the merchant’s website after the initial transaction, using this technology enables retailers to provide smoother and safer payment experiences for their customers.
3D Secure Authentication:
An authentication mechanism called 3D Secure is designed to reduce fraud and increase security for online card payments.
After entering their payment card information during a transaction, clients must complete a second two-factor verification step with the card issuer to confirm the payment.
Payment processing is made safer and easier across a variety of devices with the use of 3D secure payment gateways.
By October 2022, Visa and Mastercard said they would stop supporting the 3D Secure 1 protocol internationally and only offer 3D Secure 2, which is an improved version of 3DS1.