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How do Payment Gateways Work?

How do Payment Gateways Work

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How do Payment Gateways Work?

Here at PAYFORT we live online payments day in and day out, and we sometimes forget others don’t do the same. That’s why this week we’re going to be looking at what exactly a payment gateway is and what it does for your ecommerce business.

If your operating in the world of ecommerce you already know that using online transactions is the fastest and most convenient way to settle payments. With the reach of the internet growing every day, online transactions let just about anyone to easily buy or sell products all around the world.

But transactions online also bring potential security threats and robust payment security is required to avoid false charges. This is where payment gateways come in, they help businesses capitalize on the benefits of online transactions while protecting their customers from threats.

What is a Payment Gateway?

Payment gateways are specialized pieces of software that authorize and manage payments for customers, merchants, and banks while providing added security to all parties. When implemented correctly, it acts as a seamless connection between e-commerce applications and credit cards processing networks or banks.

A payment gateway is a middle man between merchants and customers that make sure a customer’s money is securely transferred from their account to the merchant’s. They are essentially the virtual equivalent of the terminals that are still used in brick and mortar stores.

How it works?

As we outlined above, a payment gateway is responsible for authorizing transactions between customers and merchants. Here are the basic steps on how it works:

Step 1: It all starts when a customer places an order on a website by pressing the submit order or checkout button.

Step 2: Next the merchant securely sends the details of that customers order to the payment gateway and the transaction is routed to the issuing bank to authorize the transaction.

Step 3: Once the transaction has been authenticated, the transaction is then approved or declined (depending on funds available in the customer’s account) by the customer’s issuing bank.

Step 4: Then the payment gateway relies that message to the merchant.

Step 5: The bank settles the transaction amount with the payment gateway and the payment gateway settles the money with the merchant.

Additional Features

As well as helping to settle money, payment gateways can provide merchants with additional features aimed at helping businesses grow. These include detailed reporting, inventory management, and optimization suggestions. Payment gateways put the control of business payment acceptance into your hands, giving you more control over your business growth.

Does your team know how your organizations payments are processed? Do you use a payment gateway for your transactions? Let us know in the comments below and if you aren’t already be sure to follow PAYFORT on Twitter for more updates.

GET STARTED with your online business today!

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12 Comments

12 Comments

  1. yoshi silitonga

    October 4, 2017 at 2:30 pm

    Hello.

    im thinking to start a small online dropshipping business selling fashion accessories. im currently a resident of UAE
    my question, do i need to have a business license for this? my target market will mostly US and European market. however i need to have the access to withdraw my money here to my local bank

    • Dalia Gammal

      Dalia Gammal

      October 11, 2017 at 6:33 am

      Hello Yoshi
      Thank you for getting in touch!
      yes you would need to have a trade license under the same name and activity of the website, plus a company bank account in the UAE.

  2. Ahmed

    October 20, 2017 at 10:26 pm

    Hello,
    4 days ago I had made a purchase from a website called SNEAKER HUNT Middle East and apparently they use your website for online credit card payments. Once I made the payment I received an e-mail from sneaker hunt pay fort stating I actually made the payment. then I received another email from sneaker hunt customer service saying that it takes a couple of days to clear my credit card payment. I wanted to ask is this true you work by bank transfers not direct online payment as any other website ?

    • Dalia Gammal

      Dalia Gammal

      October 22, 2017 at 11:48 am

      Hello Ahmed,
      Thank you for getting in touch!
      We are an online payment provider and we do not support bank transfers.
      What might have happened is that the merchant only authorized your transaction without deducting the amount from your credit card right away, and in that case it would take several days for the amount to be captured.

  3. Tamer ElZarka

    November 13, 2017 at 11:06 am

    i am starting a new business ( online services) locating in Egypt.
    does payfort provide payment gateway using WordPress plugins

    Note:
    i have a trade license

    please advice

    • Dalia Gammal

      Dalia Gammal

      November 14, 2017 at 7:38 am

      Hello Tamer

      Thank you for getting in touch!

      We do provide wordpress ready made plugins, you can actually access the below link which will give you more details about the plugins we support:

      https://www.payfort.com/fast-integration/

      And please don’t hesitate to access the below link to apply for our services and book a call with one of our representatives in Egypt so we can better discuss your business:

      https://www.payfort.com/get-started/

  4. Amit

    December 14, 2017 at 8:10 pm

    Hi,

    What is the difference from going through you or going through a bank merchant?

    Going through you directly would it be more cost effective?

    Already have online business going through 1 of your partner banks merchant division and would like to go through you directly.

    Also looking to start another ecommerce site in Jan 2018.

    Please advise pros and cons.

    Thanks

    • Dalia Gammal

      Dalia Gammal

      December 17, 2017 at 11:25 am

      Hello Amit!
      Thank you for getting in touch!
      If you can please access the below link where you will answer a few questions about your business, then you can book a call with a PAYFORT member to better discuss your inquiries:

      https://www.payfort.com/get-started/

  5. Scott

    December 30, 2017 at 5:12 pm

    Wow! This can be one particular of the most beneficial blogs We have ever arrive across on this subject. Basically Fantastic. I’m also an expert in this topic therefore I can understand your hard work.

    • Dalia Gammal

      Dalia Gammal

      January 3, 2018 at 1:17 pm

      Hello Scott,

      Thank you very much for your feedback!
      We are glad you enjoyed the post, so stay tuned for more!

  6. sheela

    January 8, 2018 at 6:10 am

    Thanks for sharing helpful information about Online Payment Gateway and Online Payment Solution for more information about Online Payment then visit this site.

    • Dalia Gammal

      Dalia Gammal

      January 8, 2018 at 6:46 am

      Thank you for your feedback!
      We are glad you enjoyed our post

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