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How does the payment gateway application work?

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Harvey Specter
How does the payment gateway application work?

Payment gateway is a web-based service that integrates into an e-commerce website shopping cart and collects payment information provided by customers at the check-out. The gateway then encrypts the data and transmits it to the card issuing bank for authorization. The authorization response is then sent to the merchant and is displayed to the cardholder. In essence, the payment gateway serves for web-based merchants the same purpose that a point of sale terminal does for retail businesses. 

Payment gateways fulfill a vital role in the eCommerce application and transaction process, authorizing the payment between merchant and customer. 

This is how a purchaser does a purchase through a payment gateway:

  1. Purchaser places order.
  2. Merchant securely transfers order information. Processing platform receives order information and performs requested services.
  3. Processing platform formats the transaction detail appropriately and securely routes the transaction authorization request.
  4. The transaction is then routed to the issuing bank (purchaser's bank) to request transaction authorization.
  5. The transaction is authorized or declined by the issuing bank or card (Visa, Master,Discover, American Express, etc.).
  6. Processing platform returns the message to the merchant.
  7. Issuing bank approves transfer of money to acquiring bank.
    The acquiring bank credits the merchant's account.

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Harvey Specter
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