Online Payment Gateways: What they Are, and How They Work

Feb 14, 2017

If you’re the owner of a brick-and-mortar business, you have probably adopted credit cards as one of the primary methods for your customers to make payments. For that purpose, your merchant account provider has likely installed a point-of-sale terminal on your counter.

Despite having the same payment processing needs, online traders don’t have the luxury of physical premises. So, rather than a POS terminal, these merchants use its virtual equivalent, typically called a payment gateway.

A payment gateway facilitates the exchange of information between a dealer’s website and a customer’s bank account. Payment gateways might seem complicated to the average inquirer, but they are relatively easy to take in.

The integration process

To accept credit-card payments directly through your website, you need to open a merchant account with a payment processor that caters for internet-based businesses. Once your account is up and running, integration of a payment gateway into your site follows. You may want to do it yourself, but account providers such as eMerchantBroker are always at your disposal.

For good returns with new payment gateway, ensure the fees charged by the processor are as reasonable as you want them. Your gateway should also be flexible enough to accept as many types of credit cards as possible.

Putting the gateway to work

After integrating the payment gateway to your site, customers can immediately start making purchases with their credit cards. Here’s a step-by-step breakdown of how the gateway will work.

  1. Customer will begin by browsing around your website and clicking on the items they want to buy to add them to their shopping cart. And once done, they will place a purchase order through the “buy” or equivalent button.
  1. Whether the customer makes an order via a browser or app, the credit card information will be encrypted and sent to your server. Your payment gateway will then pick up the information, which it’ll then forward to your payment processing company.
  1. The payment processor’s job is to push the transaction information to the customer’s card association, such as Visa or MasterCard, and accept a response code from the credit card company, which it then sends back to the payment gateway.
  1. The payment gateway then proceeds to interpret the response code, and relay the underlying confirmation or rejection response back to the merchant and the customer.

This entire process only takes a few seconds.

Security measures

The security of your payment gateway is of paramount importance, and although the safety precautions may vary depending on the processor you choose, measures such as data encryption, HTTPS protocol, and Virtual Payer Authentication (VPA) are fairly standard.

Payment gateways can be tricky, but it is important for an online merchant to understand what they are, and how they work.

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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 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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