A payment gateway is necessary if you operate an online business or wish to accept credit card payments directly on your website. The system that receives and transmits payment information from a client to a merchant’s bank account is known as a payment gateway. Data collection, ensuring money is accessible, and getting a merchant reimbursed are its responsibilities. An online payment gateway is a piece of cloud-based software that links a customer and a retailer. When a cardholder uses their card to make a purchase in person, the software integrated into the point-of-sale (POS) system or card reader is what actually processes the transaction. Any business that wishes to take internet and credit card payments must have a payment gateway. The technology moves money from a client to a merchant by distributing financial data to the required parties for payment authorization.
Participants in online payments
We must first identify the major actors in online payments before delving further into the concept of a payment gateway. These are the main parties in the payment process when a client clicks the “Pay” button on your website:
- The merchant is you, an online business that operates in any industry (travel, retail, eCommerce, gambling, forex, etc.) and provides clients with a good or service.
- The customer, often known as the cardholder, is the person who requests access to the goods or services the merchant is offering and starts the transaction.
- The bank that issues the cardholder’s credit or debit card on behalf of the card provider is known as the issuing bank (Visa, Mastercard).
- The financial institution that manages the merchant’s bank account, sometimes referred to as the merchant’s account is the acquirer, also known as the acquiring bank. The issuing bank receives the transactions from the merchant and forwards them to the acquiring bank for payment.
Different Payment Gateway Types
Payment gateways come in three primary categories:
- Redirect: To complete the transaction, the payment gateway just directs the consumer to a payment processor, such as PayPal or Stripe.
- Hosted (off-site payment): When a consumer makes a purchase on your website or in person, the payment information is sent to the servers of the payment provider for processing. This is how the POS systems from Stripe and Square work.
- Self-hosted: The full transaction takes place on your servers (on-site payment).
Payment Gateway Companies
Joining a payment service provider is the simplest approach to obtaining a payment gateway for your online company. You don’t need to worry about as many moving pieces because payment service providers like Square, PayPal, or Shopify handle the entire process and serve as your merchant account. To begin collecting payments, all you need to do is open an account with the payment service provider, add the relevant buttons or code to your website if it doesn’t already have it, and you’re good to go. You may either pick a payment gateway provider or create a custom solution if your company has more complicated demands. To take credit card payments, you must set up the required hardware and software and register a merchant account with a bank.
Choose a Payment Gateway
The easiest route to do if you are just starting a small business is to use a payment service provider like PayPal, Stripe, or Square. You don’t have to bother about setting up an additional bank account or unique software because they manage the entire procedure for you. By choosing a third-party service, you give up some of your control over the user experience but also eliminate the need for security management on your end.
Payment Gateway vs. Payment Processor
The words payment gateway, payment processor, and payment service provider are sometimes used interchangeably, however, they refer to three different concepts. To move money into your merchant account, a payment processor sends data between the issuing and acquiring banks, but it needs a payment gateway to interact with the other moving elements and approve the transaction. A payment service provider, like PayPal, offers a merchant account, a payment processor, a payment gateway, as well as other features to manage every facet of a transaction.
It could be difficult to process all of this payment gateway information. That is where Medialinks comes which completely puts their focus on the customer experience since they are aware that choosing the correct online payment partner is an important choice for your company. Your company will be able to provide improved online experiences and seamless customer journeys that your clients will appreciate by utilizing a payment solution designed for today’s demanding consumers. We serve companies of all sizes so better not to wait and let’s make things happen!