Definition: A payment gateway is an ecommerce service that processes credit card payments for online and traditional brick and mortar stores. Payment gateways facilitate these transactions by transferring key information between payment portals such as web-enabled mobile devices/websites and the front end processor/bank.
Common features of online payment gateways include:
Payment gateways fulfill a vital role in the ecommerce transaction process, authorizing the payment between merchant and customer. Popular payment gateways include PayPal/Braintree, Stripe, and Square.
- 1. They curb fraud cases since they have tools that prevent fraud.
- 2. They also have the capability of processing electronic checks. These provide an alternative to credit cards.
- 3. For people conducting business on a regular basis, there is a tool that makes an automatic billing saving your time.
- 4. It is universal such that anyone can conduct business from anywhere with any currencies as they can convert any currency to your preferred choice.
Choosing an online payment system that caters for all your needs can be tricky especially due to the emergence of many payment gateways. One has to be familiar with all the gateways before he/she can decide on which one to go for. You also have to know the limitations of each so that you will get the best that is available with your preferences in mind. There are some factors that one has to consider before picking one payment system over the other. These factors help you integrate well with your clients and enables business to run smoothly.
Other Payment Gateway Functions
Payment gateways also screen orders with a myriad of helpful tools. This screening process filters out as much fraud as possible. Examples of gateway fraud detection tools include:
- Delivery address verification
- AVS checks
- Computer finger printing technology,
- Velocity pattern analysis
- Identity morphing detection
- Payment gateways even calculate tax amounts to authorize requests transmitted to the processor.