Accepting payments online and integrating a payment gateway into your online business is your first step to success, but do you understand what a payment gateway is?

We’ve been advising people for some time now and more often than not business owners are confused by what a payment gateway involves. It’s not surprising with so much misinformation out there and convoluted descriptions.

However, it’s important for you to understand these basic payment processes and terminology as you embark on your exciting journey.

We’ve compiled a list of common questions about payment gateways we answer daily, so you’ll be prepared and in control at every stage.

 

What Is a Payment Gateway?

One of the main problems with gaining a comprehensive understanding of payment gateways is managing to find a simple and detailed definition. Too often websites are overly technical and confusing with their explanations.

In simple terms, a payment gateway is a system that works behind the scenes of your website. Its job is to provide a safe bridge for the payments you receive from customers on their way to your bank.

The process involves three steps:

  • The online checkout collects the customer’s payment details.
  • The payment gateway safely transports the details via the processor.
  • The Merchant’s processor processes the transaction with a referee to the payment type and issuer bank. Once approved the money, less some fees are paid into your internet merchant account (an online holding bay) before being deposited into your business bank account.

It’s the payment gateway that allows merchants to accept online payments by providing a bridge between the different stages of the payment process.

The job of your Payment gateway is to provide extra security for the whole process. The aim is to always protect you from fraud and chargebacks. Your Customers can’t choose their payment gateway, so it’s imperative that you ensure the safety of their confidential financial information as it passes through the untrustworthy internet, from your website to the bank.

Security is at the heart of Safe2Pay’s payment gateway. Not only are payment details encrypted but we go a significant step further, Safe2pay has introduced a unique tokenisation technology that substitutes payment detail with a randomly generated number, based upon a patent protected, unique tokenisation process. Ensuring that the risk of payment fraud is radically reduced.

How Does a Payment Gateway Work?

For a quick understanding of the payment journey, we’ve set out the steps as follows;

  1. A customer when buying online enters payment details at checkout and presses submit.
  2. The payment gateway securely carries the transaction to the merchant’s bank.
  3. The merchant’s bank processor submits the transaction to the credit card network ( Like Visa or Mastercard). Who then re-routes the transaction to the bank that issued the credit card to the customer.
  4. The issuing bank then approves or declines the transaction based on the funds available in the customer’s account. It then passes the results back to the credit card network who will consequently forward this information to the payment gateway.
  5. The payment gateway receives this message and sends it to the website.
  6. The issuing bank sends the funds to the network which passes the funds to the merchant’s internet account. The bank then deposits the funds 1-4 days later, into the merchant’s account.
  7. If the transaction is approved, then the merchant delivers the goods or services to the customer, and everyone is happy.

 

Think of the payment gateway almost like a train that carries information through all the different stations, the conductor talking along the way with the station master at each stop.

How Much Does a Payment Gateway Cost?

Every payment gateway has a unique payment structure, so it’s important to do comparative research. Some processors will ask for a monthly maintenance fee, while others will require a one-time setup fee. Whatever the case it’s important to look out for hidden costs and conditions that may affect the overall price.

Some gateways may seem like their rates are too good to be true, and it could be because they are. Take into account that these providers may charge special fees for things like cancellations, withdrawals, and batch processing.

The possible fees include:

  • Monthly account fees
  • Membership fees
  • PCI-compliance fees
  • Initial setup fees
  • Batch fees
  • Refund/chargeback fees

Learn more about how to pick the best payment gateway for you here. 

To Sum It All Up

Safe2Pay understands that the setup process can be expensive for new business owners, so we’ve worked hard to make our prices competitive and customised for your business. To understand your best pricing options talk to our friendly customer team on 1800 723 327. They can design a pricing structure that’s best for you. Don’t waste another minute, contact Safe2Pay online or call our friendly team on 1800 723 327 so we can get your mobile credit card ready and get you paid.