What is an online payment gateway
An online payment gateway is a technology that enables businesses to accept digital payments from customers for products or services through their websites, apps, or other online platforms. It acts as a bridge between the customer’s bank account and the merchant’s account, ensuring the secure transfer of payment information.
An online payment gateway is a technology that enables businesses to accept digital payments from customers for products or services through their websites, apps, or other online platforms. It acts as a bridge between the customer’s bank account and the merchant’s account, ensuring the secure transfer of payment information.
Key Features of an Online Payment Gateway:
- Secure Transactions: Protects sensitive data like credit card numbers using encryption and fraud detection tools.
- Multiple Payment Methods: Supports various payment options, such as credit/debit cards, digital wallets, net banking, and UPI (in some regions).
- Real-time Processing: Ensures transactions are processed instantly or within seconds.
- Integration: Easily integrates with e-commerce platforms, websites, and apps.
- Currency Support: Often supports multiple currencies for global transactions.
How It Works:
- Customer Initiates Payment: A customer selects a product or service and chooses to pay online.
- Payment Gateway Encrypts Data: The gateway encrypts and securely transfers the payment details to the acquiring bank.
- Authorization: The acquiring bank contacts the card network (like Visa or MasterCard) and the issuing bank for authorization.
- Transaction Approval/Denial: The issuing bank verifies the transaction details (e.g., funds availability) and sends a response back.
- Payment Confirmation: The merchant and customer receive confirmation if the transaction is successful.
Examples of Online Payment Gateways:
- Global: PayPal, Stripe, Square, Authorize.Net.
- Regional:
- India: Razorpay, Paytm, Instamojo.
- Europe: Klarna, Mollie.
- Southeast Asia: 2C2P, PayMongo.
Benefits:
- Convenience: Customers can pay online from anywhere.
- Business Growth: Enables businesses to reach more customers.
- Security: Reduces risks associated with handling cash.
Considerations:
- Transaction fees may apply for each payment.
- Compliance with regional regulations like PCI-DSS standards is mandatory.