What Is a Payment Gateway?

As the growth of e-commerce, people start to get used to term of payment gateway. This is important term in the whole process of e-commerce, especially related to payment process and procedure. Of course, it is important to understand this term well. Although you may not be the one who often use services of e-commerce, it is still important information to know. There can be possibilities where this term may develop and it can have wider ranges or no longer limited only to the process in e-commerce transaction.

Definition and Important Information about Payment Gateway

Simply, payment gateway can be understood as services provided by the e-commerce company to process transaction. Specifically, this is to process payment by using credit cards to pay things bought in online store. This gateway will transfer certain information needed in the payment process. The information will be transferred into certain portals where there are sellers or providers of e-commerce and authority of bank involving there. In this case, there are some important tasks done by the gateway in transaction process and these are some of them.

1. Encryption
As what is the concept of encrypting, this process works when users or buyers access the website. Then, the website will encrypt the data and these will be sent to the provider or vendors of certain e-commerce. In this encryption task, gateway will send data of transaction, so it will be processed to the step of payment.

2. Authorization request
In the task of encryption, data transfer involves vendors of e-commerce. In the authorization, data of transaction will be sent to bank issuing the credit cards. Based on the data, the bank will decide whether they are going to approve or deny the request.

3. Processing the order
After certain data are sent to vendors as well as the bank and get the response, the gateway will process the payment. Since there has been decision from issuing bank, transaction can be proceeding and merchants can follow up the order. These may look like complicated process, but these only takes few minutes.

4. Transaction
After those things are proceed by merchants, gateway will clear the transaction. Of course, this process will only work when merchants have finished and completed their jobs in dealing with orders, such as shipping the things ordered by buyers.

These are some basic information and process of payment gateway. In this case, it is clear that the gateway makes transaction easier. It is not just to shorten the transaction process, but it also involves process of verification and authorization. These two processes are important and these cannot just be ignored. Of course, there are also many parties involved in payment process by using gateway. All of them needed in the transactions get the necessary information, so there can be fast and clear authorization to follow up the order. Although these descriptions may sound simple and fast, actually it happens because there have been established systems and technology. Without these systems, payment gateway may not run smoothly.