How Payment Gateways Guarantee Online Payment Security & Safety

Sep 22, 2020

Payment gateways play a critical role in the transaction flow between customers and online merchants.

Gateways provide payment security, ensuring safe transactions, even in the absence of the one-on-one buyer-seller experience.

Because web merchants rely almost entirely on trust, more and more criminals target eCommerce businesses to steal from them and their customers.

Many instances of eCommerce payment fraud are difficult to spot. Business owners may not realize such crimes until the damage is done.

That’s where payment gateways come in. This process serves as the authentication door to all web-based transactions. Based on a security analysis, a gateway service may authorize or deny payments.

In a nutshell, the gateway is a go-between linking merchants to clients. Taking on such a key role means the service provider must ensure each payment’s safety without compromising speed.

All eCommerce merchants rely on software that accepts or declines transactions on their behalf.

How a Payment Gateway Ensures Transaction Safety

Before launching an eCommerce, it helps to understand the vital role of the gateway in each transaction.

With the increased speed of payments, merchants must realize that fraud risks are higher than before.

Payment gateways guarantee security by encrypting confidential client data to scan and authorize transactions. Sensitive data include the customer’s credit card number as well as other financial details. 

Stage 1 

Payment safety concerns begin as soon as a shopper orders an item. Before advancing to checkout, a client must submit specific data about their preferred payment approach.

Stage 2

The seller or merchant then captures and forwards the details to their payment gateway service. The customer chooses their favorite payment approach, so merchants must strive to offer multiple options. 

The gateway service then sends the data to the issuing bank behind the credit card. In the meantime, the payment is held awaiting validation.

Stage 3

Based on the issuing bank’s response, the payment gateway might give the go-ahead or turn down the payment request.

This is also the time a gateway service determines whether the shopper has enough reserves in their cards to initiate the transaction. 

Many issuing banks provide room for authentication to reduce the risks of payment fraud.

Stage 4 

If the card details permit the completion of the requested transaction, the gateway gives the merchant the go-ahead.

Similarly, the gateway will warn the merchant of any phony-looking transactions. The merchant should reject such payment requests accordingly.

Stage 5 

For all successful authentications, the card-issuing bank resolves the request with the gateway service, which then routes the information to the merchant. 

And while this may seem like a long process, everything happens almost immediately because both parties understand the need for speed in eCommerce payments.

Final Words

Merchants can rely on payment gateways to improve security and complete speedy payments. Operating without such an intermediary can increase fraud risks and threaten to ruin a business.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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