What Is A Payment Gateway And How Does It Work?

Posted by Alex Messi on January 4th, 2021

Instant online payments are one of the most commonly preferred methods of payment in recent times. And anyone who uses an online payment application as a method of payment is probably familiar with the term payment gateway solutions. But for those who are unfamiliar with it, a Payment Gateway is an online payment service that is devised as a means to make and receive payments. The primary role of a payment gateway is to approve the transaction process that takes place between a merchant and a customer. It provides multiple payment options like a credit card, debit card, QR code, wallet, etc to the customer. While using an online payment application, security is of the utmost importance, and payment gateway solutions deliver just that.

A payment gateway follows a specific procedure every time you make payment. Although the entire process requires mere seconds to complete, the actual process is a bit more complicated.

• The customer places an order and initiates the payment with the help of an online payment application. After this, it encrypts the customer's data and sends it to the merchant bank.
• The encrypted data then goes to the payment network, and then it is directed to the processing center.
• The processing center then approves the transaction.
• When the transaction is approved, the customer is notified that the transaction was successful.
• The merchant is then informed about the success of the transaction.
• The payment gateway solutions then settle the payment with the merchant, and the bank settles it with the payment gateway.

Now that you know how an online payment application works, also know this, different applications have a different set of features that they offer. Make sure you choose the right payment gateway solutions that meet your requirements.