The term “Payment Gateway” is a crucial component of online transactions in today’s expanding digital horizon. Whether you are shopping online, selling goods, or providing services, understanding the payment gateways in India is fundamental to navigating the online world of today.
Clicks replace cash, payment gateways ensure that online payment processing is secure, allowing you to enjoy the convenience of online payments without worrying about the safety of your transactions.
Read on to know A to Z about the payment gateway.
What is a Payment Gateway with example?
Simply put, a payment gateway acts as the mediator between a customer and a seller during an online transaction. It enables secure and swift online payments by transmitting payment data between the customer’s bank and the merchant’s bank. This is like a digital bridge that securely transports your payment from your account to the seller.
A payment gateway and a payment processor play different but interconnected roles in online transactions.
Payment Gateway vs Payment Processor
The payment processor is like the operational hub that manages the transaction after the payment gateway’s work. It communicates with banks to authorize and settle transactions, ensuring funds move from the buyer to the seller securely and smoothly.
How They Work Together (Example):
Imagine a buyer making an online purchase. The gateway, such as Accosis, encrypts the payment details and passes them to the processor. The processor talks to the buyer’s bank to approve the transaction for online payment processing. Once approved, the funds move from the buyer’s account to the seller, completing the purchase.
How Does a Payment Gateway Work Step by Step?
To understand the working, let us first read the list of various parties associated with a payment gateway:
- Merchant – From where you buy things or services and use the gateway to get paid
- Customer – The person purchasing something online and using it to make the payment
- Payment Gateway Provider – The company that helps with the technology and infrastructure to make secure online payments between customer and the merchant.
- Payment Processor – The intermediary that transfers the data between the payment gateway, banks, and card networks to authorize and settle payments.
- Issuing Bank – The bank that issues cards to customers. They also authorize or decline transactions based on available funds or cardholder settings.
- Acquiring Bank – The merchant’s bank account to receive funds from the issuing bank.
- Card Associations/Networks – Visa, Mastercard, American Express, etc., who set rules and facilitate transactions between both the above banks.
The process between the above parties works as below:
- Initiating Payment – As a customer begins a transaction, the gateway captures crucial payment details, such as card information, wallet credentials .
- Encryption – To ensure security, all collected data undergoes encryption, preventing any unauthorized access or interception by malicious entities.
- Authorization Request – Following encryption, the secured information travels to the payment processor, initiating a communication with the customer’s bank to seek approval for the transaction.
- Authorization Response – The bank responds by either approving or declining the transaction, evaluating factors like available funds or potential risk.
- Transaction Confirmation – Upon approval, the gateway notifies the merchant of the successful transaction, enabling the finalization of the purchase.
Thus, the amount is deducted from the customer’s bank and settled in the merchant’s account as per the settlement cycle.
What Happens if a Payment Gateway Fails?
Failures are rare but can occur due to various reasons like network issues, technical glitches, or bank server problems. In such cases, the transaction does not proceed, and customers are usually prompted to retry. Funds are not deducted if the transaction fails, ensuring no loss occurs.
Next, let us know the reasons for using the gateway for online payment processing.
Why is a Payment Gateway Used?
The primary purpose of a payment gateway is to facilitate safe and efficient online transactions. It ensures that sensitive financial information, like credit card details, remains secure by encrypting the data. Moreover, it enables businesses to accept payments from various sources, providing customers with convenience and flexibility in payment methods.
Security Measures
Payment gateways implement encryption protocols like SSL (Secure Sockets Layer) to protect against data breaches, ensuring customer information remains confidential.
Different Payment Options
They allow businesses to accept payments via various methods such as credit cards, debit cards, wallets, UPI, net banking, and even cryptocurrencies, meeting different customer preferences.
Global Accessibility
They facilitate transactions across borders, enabling businesses to engage in international trade seamlessly.
Professional Image
Offering secure and convenient online payment processing enhances a business’s professional image. It instills confidence in customers, positioning the business as credible and reliable.
Streamlined Operations
They automate payment processes, reducing manual intervention. This streamlines operations, enabling businesses to focus on core activities rather than administrative tasks.
Customer Retention and Loyalty
By providing a seamless and secure payment experience, businesses can foster customer loyalty. Satisfied customers are more likely to return, becoming repeat buyers and advocates for the brand.
Competitive Edge
In a competitive market, offering diverse and secure payment options through gateways gives small businesses a competitive edge. It aligns them with larger competitors and boosts their standing in the digital marketplace.
So, read on to know the general steps if you now want to start using the payment gateway for online payment processing
Getting Started with A Payment Gateway
You need not be a technical expert to use a gateway on your website or mobile application. Read the step-by-step guide to integrating a payment gateway below:
Research and Selection
Start by exploring different service provider options. Look at things like how much they charge for each transaction, how secure they are, how easy they are to set up, and if they offer good customer support. When you find one that fits your business needs, it is time to move to the next step.
Setting Up Your Merchant Account
To start receiving payments, you will need something called a ‘merchant account.’ The service provider helps you set this up and links it to your business bank account, making sure your payment flows smoothly.
Adding the Gateway to Your Website
Now comes the technical part. Depending on the gateway you choose, you might need to install plugins or use APIs to connect it to your website. Depending upon the service provider, this becomes easier to set up with their support and developer-friendly documentation.
Testing and Making Sure Everything Works
Before letting your customers use the checkout, it is essential to test it thoroughly. Try making test transactions, check different payment methods, and ensure there are no problems or security issues. This step is crucial to avoid any hiccups later on.
Going Live and Keeping an Eye on Things
Once you are confident everything works perfectly, it is time to launch the payment gateway on your website. But it is not over yet! Keep an eye on transactions and make sure security measures are always in place to ensure smooth and safe online payment processing for your customers.
Is a Payment Gateway Safe?
To facilitate a safe and secure environment and also to be compliant with the RBI regulations, the payment gateway needs to follow certain security standards. They employ encryption methods like TLS (Transport Layer Security) or SSL to safeguard sensitive data during transmission.
The role of Encryption in Online Payment Processing includes:
- Encryption algorithms such as SSL and TLS convert sensitive information into unreadable code. This transformation ensures that if the data is intercepted, it remains unreadable and inaccessible to unauthorized individuals, bolstering security during transmission. Thus, it preserves the confidentiality and integrity of the information being transmitted.
- It acts as a barrier against man-in-the-middle attacks, where hackers intercept communication to steal sensitive data. By encrypting exchanged data between the customer and merchant, encryption safeguards against unauthorized access, and securing the integrity of transactions.
Adherence to industry-standard security protocols like PCI DSS is crucial. Compliance ensures businesses meet strict security requirements, guaranteeing robust measures are in place to safeguard payment information, thereby boosting trust and security in transactions. Compliance with stringent security standards such as PCI DSS ensures the protection of customer and merchant data. Fraud Prevention Measures and advanced fraud detection tools and algorithms help identify and prevent fraudulent transactions.
Importance of Secure Payment Gateways in E-commerce
Safety Assurance – In today’s online world, trust is key. The gateways ensure your financial info stays safe. They use strong encryption, like a secret code, to protect the data. This builds trust between you, the buyer, and the business.
Shielding Against Data Breaches – Imagine a lock on your personal info. The encryption turns the payment details into unreadable code. This stops sneaky hackers from understanding or stealing the info.
Fighting Fraud – There are hackers out there trying to trick the system. Gateways have important tools to spot these tricks. They analyze how transactions happen and find any unusual patterns. This keeps businesses safe from losing money and keeps you and the customer protected.
Peaceful Shopping – When a site feels secure, you feel better about buying stuff, right? Payment gateway security makes sure your data is safe. Online purchases become worriless due to confidence in eCommerce payment solutions.
Now, you will get various payment gateway options in India and you will need to select the ideal one for your business.
How To Choose the Right Payment Gateway in India?
If you are looking to partner with a service provider, below are a few aspects to carry out a comparison between different payment gateway providers:
Service Offerings and Features
A detailed comparison examines the range of services and features offered by different payment gateways in India. Using a service provider like Accosis which offers additional fintech services like international payment acceptance, multi-currency support, subscription billing, payouts, invoicing, cash management, payment products, connected banking, current accounts, etc. will be crucial in the future. It makes things easier for businesses by bringing multiple financial tools together in one place. This means you can manage your money, handle invoices, and make payments all from the same platform.
It saves time, simplifies financial tasks, and gives you better control over your business finances. Having these services connected can streamline operations, improve efficiency, and provide more comprehensive financial solutions for businesses of all sizes.
Transaction Fees and Charges
Understanding the fee structure is vital. Some providers charge per transaction, while others may have a monthly or annual subscription fee. Examining these fees in detail and assessing how they align with the business’s budget is essential. Also, being aware of any additional or hidden charges is essential.
Customer Support
Prompt and reliable customer support is essential. Assessing the quality of customer service, availability, and responsiveness in addressing queries or issues ensures a smooth experience for both merchants and customers.
Security Measures
You need to evaluate the security measures implemented by your provider of interest. Also, you must know if the particular service provider is compliant with the RBI regulations. Assessing their adherence to compliance standards like PCI DSS and the presence of robust encryption and fraud prevention tools helps in making an informed decision.
Integration and User Experience
Ease of integration into the existing website or platform and the overall user experience are key factors. A payment gateway that seamlessly integrates with the business’s platform and offers a user-friendly checkout experience holds significant value.
What are the 4 types of payment gateway?
Understanding the distinctions among payment gateways in India assists businesses in selecting the most suitable option based on their specific needs, security considerations, and customer preferences.
1. Hosted Payment Gateways
Hosted payment gateways operate by directing customers to a secure payment page managed by the gateway provider. When customers proceed to checkout, they are first rerouted to the page hosted on the gateway provider’s servers.
Merchants integrate hosted gateways into their websites by adding redirection links to the secure page, making integration simpler and requiring minimal technical expertise. The key advantage of hosted gateways is that they relieve merchants of security responsibilities. These gateways handle sensitive payment data, encrypting and securely transmitting it, without the merchant directly managing this information.
For instance, Accosis is an example of a hosted payment gateway in India, offering secure payment checkouts and diverse payment options that cater to various business needs.
2. Self-hosted Payment Gateways
Self-hosted payment gateways allow customers to input payment details directly on the merchant’s website. The payment form seamlessly integrates into the site, enabling smooth checkout without redirecting customers. Merchants enjoy more control over the checkout process with self-hosted gateways, customizing the payment form’s appearance and functionality to match their website’s design and user experience.
To ensure secure data transmission between the customer’s browser and the merchant’s server, self-hosted gateways require an SSL (Secure Sockets Layer) certificate. This certificate encrypts data, safeguarding it from unauthorized access.
3. API-Hosted Gateways
API-hosted gateways seamlessly blend into the merchant’s website via Application Programming Interfaces (APIs), providing a checkout experience without redirecting customers. Integration occurs directly, enhancing user convenience as customers finalize transactions without redirection, contributing to a smoother checkout process.
The gateways offer flexibility for customization, allowing businesses to align the checkout process with their website’s aesthetics while ensuring security.
4. Local Bank Integration Gateways
These gateways directly link to a specific bank’s payment system, enabling transactions specific to that bank or particular banking networks.
Often used for localized transactions or meeting regional or banking network requirements, local bank integration gateways facilitate transactions tied directly to the respective bank’s infrastructure.
Examples in India include ICICI Bank’s payment gateway, HDFC Bank’s gateway, and State Bank of India’s payment solutions, serving their respective banking networks.
Understanding these distinctions among payment gateways in India assists businesses in selecting the most suitable option based on their specific needs, security considerations, and customer preferences.
In conclusion,
Payment gateways in India are the backbone of secure and efficient online transactions. Their role in providing a seamless, secure, and convenient payment experience for both buyers and sellers cannot be overstated. By understanding the basics of payment gateways, you are better equipped to navigate the realm of online payment processing with or without a website.
Reach us, if you are looking for further information or the best payment gateway in India.
