So, you’re setting up your online store. In brick-and-mortar, it’s easy: goods and cash are are exchanged between a customer and a seller in person. But when you do your trading online, the first thing you need on your site is a payment gateway. Why is that? Well, there are many reasons, including comfort, better support, legal factors, and – first of all – security.
How Payment Gateways Work
In short, a payment gateway is an intermediary that connects all the parties involved in a purchase: the customer, the merchant, the banks they both keep their accounts in, and (nowadays necessarily) third-party security services.
- The customer proceeds to the checkout page that is a part of a payment gateway, when they have chosen the purchase.
- The gateway requires their card number and extra data (like CVV code, expiry date, and maybe more).
- The gateway sends this data from the customer’s browser to the merchant’s server where details like transaction amount are checked.
- The gateway sends the data from the merchant’s server to the payment processor of the bank that issued the card.
- The bank resends the information to the association (VISA/MasterCard/AmEx) and checks whether the transaction is possible (whether there is enough money on the account, whether the amount does not exceed the user set limit, and so on).
- When the transaction is authorized and confirmed to the merchant, they ship the goods.
- At the end of the day, all the transactions sum up, and the banks actually transfer the funds.
Of course, this is a simplified description, but it shows how many various parties get involved. In addition, a payment gateway can use various anti-fraud services to check transactions details almost in real-time. This helps in preventing fraud by declining transactions if the fraud probability gets too high.
Why You Need a Payment Gateway for E-Commerce
Well, a merchant can just post your card number on their website and receive payments manually. But there are reasons against this:
- It may be illegal for entrepreneurs in your country (and probably it is)
- If you trade actively, you won’t have enough time to manually process all the purchases;
- No security services are involved, so you are left exposed to fraudsters;
- Your card number can be used by criminals in illegal activities;
- It’s not as comfortable for customers that are mostly at more ease with payment gateways, and this can be among the main reasons.
So, connecting a payment gateway is a must for e-commerce, unless you are using a platform with a built-in gateway. These platforms, though, can be too expensive in terms of fee, plus there is a chance you sell goods that are not welcome on this particular platform, despite being legal in your country. For a standalone online store, connecting to a payment gateway is the first thing to do.
Start at the Gateways
No wonder that the entrance to the world of e-commerce starts with the gateway. Not only does it provide quicker and more comfortable transactions; it only increases safety and security. Luckily, there are great gateways with decent support and easy embedding, so just choose yours!
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