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Payment gateway is an infrastructure to enable a web merchant having an online ECommerce store to charge a customer from his credit/debit/prepaid card or bank account(netbanking) resulting in transfer of funds electronically from customer’s account to merchant’s account. So in India : CCAvenue, EBS, ICICI Payseal etc can be called as acquiring bank – which receive payments on behalf of the merchant. Using payment gateway allows us to receive payments from different channels and financial instruments at our websites. Cards used can of VISA/MasterCard/JCB/AMEX/Discover etc. Now a days all banks allow debit their accounts online using netbanking. Other modes can be by Mobile payments, Cash Cards or using IVR etc. To use a payment gateway, prior approval is required, including payment of non-refundable setup fees which can be from Rs. 0 to Rs. 75,000. For every transaction, the payment gateway charges you called TDR which can be fixed, percentage or composed of both from the amount of each payment at your website.
Also available is the same .Flow Chart You can much easily understand Payment Gateway by assuming an example and seeing the transaction flow.
as explained above key’s in the credit Now those details are passed to the Payment Processor card details either at your site or at the payment gateway site.Payment Gateway Transaction Explained 1. 2. However it increases your headache to receive and store credit card and other personal information securely at your website. the customer at your site is redirected to the payment gateway interface where he/she keys in the credit card or online bank details (e. 3. Paypal Website Express Checkout Plan). Paypal Website Standard Plan).g. you can receive credit card details at your website only( e. A merchant(you) have an ECommerce website to sell products and a customer selects a product to buy.g. entering all the details and transferred back to the merchant site just like we do for booking tickets at IRCTC. Using it you can do seamless processing of credit card payment at your website only giving customer a smooth experience since the customer is not take to the payment gateway website to key-in credit card details. affiliated to the payment gateway who is a third party agent. There is no security burden on your site and is the cheapest option compared to the above one. B. You’ll also need to be a certified PCI DSS website. Depending on the plan you’ve chosen with the payment gateway you’ve two options A. . The merchant has signed up with an Acquirer bank or apayment gateway company to receive payments from customers online. However I don’t like going to a payment gateway site. So now the customer. This is always costly and large websites opt for it. And we know that given Indian infrastructure sometimes transactions fail when the transaction fails while returing to the merchant website( as it regularly happens with IRCTC booking).
A shopping cart is usually used before the payment gateway. 8. Card Association now channels back this response to the Card Processor send it back further to the originator Payment gateway now shows whether the transaction was Card Processor payment gateway success or failure. the customer knows immediately whether or not their credit card was approved. For example if the card is of type VISA then the transaction is forwarded VISA Card Association for verification. Now the bank will do additional security check and check for your credit balance and how much you’re allowed to spend and then the response it passed back to the Card Association. This function allows your customers to pick and choose the various items they want to purchase from your website. This way. 7. 6. For example HDFC Bank. Now the Card Association transfers the transaction to the issuing bank – that is from which bank the customer card was issued. At checkout the shopping cart totals the items. 5. 9. . Internet Payment Gateway and How It Works An online Internet payment gateway allows you to process credit card orders from your website in real time.4. Payment Processor in turn passes the details to the appropriate Card Association or bank. etc. color. this response is also relayed to your merchant site so that you can process the order. adds tax and shipping and collects the customers shipping and billing information. including options such as size.
Authorization Any purchase made with a credit or debit card via a payment gateway must first be authorized by the credit card issuer. print them or download them to your computer for further processing. There are three vital things that an online payment gateway does when a customer attempts to make a purchase from your website using a credit card or a debit check card. Settling At the end of the day. encrypts the transaction information. These include authorization. settling. the internet payment gateway groups all of your transactions together and sends them off to your bank in a single batch. Some payment gateways are even compatible with Quickbooks. and reporting. This process passes the transaction to your bank so that you receive payment. This is a seamless process and your customer does not directly interact with the payment gateway as data is forwarded to the gateway via your shopping cart and a secure connection. routes it to the credit card processor and then returns either an approval or a decline notice. It also allows for fast and efficient transaction processing with an average response time of 2 seconds. The payment gateway checks that the credit card is acceptable. Once the funds settle. The gateway affords you a secure link between you. it normally takes two business days for you to see the funds electronically deposited into your bank account. . making accounting and reconciling a breeze. Reporting This process records your transactions and allows you to view them using the payment gateway report facilities. From here you can review them.The payment gateway captures the credit card transaction. your customer and your credit card processor. This process is called settling.
all at the same time. With an Internet payment gateway. an unlimited number of users can use the gateway at the same time. It also prevents fraud by storing the credit card transactions in the Internet payment gateway rather than on your website. Other Benefits Payment gateways provide you with a virtual terminal. This includes address verification and card code value (CVV) verification to ensure that the payments made via your Internet payment gateway are legitimate orders and not from fraudulent use. where you can manually enter transactions you receive via other methods other than your website. Additional Things to Look For . And good Internet payment gateways offer 24 hour email support and toll free technical support. Another benefit is that many Internet payment gateways offer you a SSL checkout page so you don’t need to spend the $150+ per year for your own secure certificate. This is extremely useful for entering in orders you may take over the phone or through the mail. unlike a terminal or software solution where only one customer can checkout at a time. Fraud Screening Tools Internet payment gateways also offer fraud screening tools to reduce fraudulent transactions. you get an unlimited user license fee with a payment gateway. In effect.Unlimited Users With an Internet payment gateway. you can have multiple users entering transactions from various locations. or one operator can enter transactions at a time. allowing you means to get in touch with someone should the need arise. This reduces your liability as you won’t have to store any credit card information.
These may include Quickbooks integration.9 percent and a support team that can get the servers back online 24 hours a day. Scalability is another key concern. World is your customer: Your clientele is now whole world since with credit card you can target any customer in any part of the world. These include uptime of about 99. transaction upload and download.you can release the payment to the customer if you don’t fulfill the order at no cost. Capture Facility: Only credit card transaction gives you facility for Capture facility . The payment gateway should also be easy to integrate to your site through the help of technical support and your webmaster. for example out of 3 products you have available . and more. recurring billing. Accepting credit cards on site–pros and cons Pros • • • • Increased Orders:You get much more orders since it is so easy to make an order using plastic cards and one can make without sufficient cash in the bank account using credit facility on credit cards. If your Gateway provider’s server can’t grow with your business. Savings in Processing Time: You save processing time for the order since you get payment instantaneously instead of waiting for cheque/DD and then process it. Ease of use is another key factor. it’s important to verify that your gateway provider’s server can handle the growth of your business. Make sure the gateway you choose has all the features you need and use.When looking for an Internet payment gateway to use. Or you can do a partial capture. You also save "lost orders" which could be due to lost cheques. Because of this. bounced cheques etc. 7 days a week. you can run into future problems. Anything less is unacceptable. there are a few key things you should look for.
Once I tried make a donation to Japan Tsunami by my credit card by using Google’s donation page. I’m then assured that it is not a fraud site and really genuine site. Cons • • • • Not all have it: Not everybody in the world has credit/debit cards. Receive Subscriptions:With credit card you can have subscription based charging from customers like recurring journal subscription. So as a customer if you ever want to buy genuine software then make sure you see a Paypal payment interface there. Trust: If I find Paypal interface. With cheques. Increased initial investment: If you want to accept credit cards then your initial investment shoots up. You’ll need to pay setup fees. DD etc full money needs to be paid outright in full. So if you accept payments from respectable payment gateway providers like Paypal.net. Moneybookers you win the trust of your customers immediately since they’d not approve merchants of dubious background. For example if you are using CCAvenue’s Economy plan then you want to add at least 8- .• • • • only 2 products . sometimes credit card do not get accepted at all. EMI Facility for customer: Now a days many banks like ICICI and HDFC are giving EMI facility for customers who use their credit cards which attracts customers to buy a product availing EMI facility. Authorize. Virtual Terminal : You can charge a customer over phone by issuing an order on her behalf using a Virtual Terminal. Not everybody wants to use it if she has one.in that case you want to charge the customer for only 2 products and refund the rest. Increases cost of your product: Cost of your product increases because you want to factor in the TDR. For example some people will not be able to use their credit card using Paypal due to stringent fraud heuristic checks. Card getting rejected: Even if one has. but it was denied every time. AMC etc and the TDR’s.
Frauds: Accepting credit cards also increase fraud transaction risks which may cost you your valuable time and money. Also chargebacks by Customer may cost you a lot in terms of penalty.• • • • • • • 10% to the selling price of product to make up for the TDR of 7% ( + 10. making sitewide changes as per its requirements. In short it takes away your valuable time. Even after integrating.3% service tax and other charges like setup fees). Reduced Black Money: In India all do it. Increase in hassles: It creates headache for you to decide to choose a payment gateway. Refunds & Chargebacks: Refund may be claimed on credit card transactions by your customers. For example 2Checkout does all you to have "no refund" policy for your ECommerce store. But if you receive payments by cards then you can’t hide your income and you must pay income and service tax. it increases the burden of integrating credit card processing with your ECommerce site. you’ll need to do regular maintenance of all credit card transactions. Limited Terms: You’ll need to sell your goods within the TOS of the payment gateway service provider. Some payment gateway companies even charge a fees for issuing a refund. adhere to its policies. Account Ban: You always run the risk of account bank and forfeiture of all your account balance if you break the TOS of payment gateway service providers likePaypal. . Increase in software burden: Software wise. It means your payment received by customers stands forfeited and possibly returned to them while you lose the product shipped to them. send all the documentation. wait anxiously for approval. You apply for it. I talked to one merchant who wanted to go for CCAvenue but only if they provide Magneto integration module for his Ecommerce site.
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