How payment gateways work
A payment gateway is an e-commerce service that authorizes payments for e-businesses and online retailers. It is the equivalent of a physical POS (point-of-sale) terminal located in most retail outlets. A merchant account provider is typically a separate company from the payment gateway. Some merchant account providers have their own payment gateways but the majority of companies use 3rd party payment gateways. The gateway usually has 2 components: a) the virtual terminal that can allow for a merchant to securely login and key in credit card numbers or b) have the website’s shopping-cart connect to the gateway via an API to allow for real time processing from the merchant’s website.
A payment gateway facilitates the transfer of information between a payment portal (such as a website, mobile phone or IVR service) and the Front End Processor or acquiring bank. When a customer orders a product from a payment gateway-enabled merchant, the payment gateway performs a variety of tasks to process the transaction
- A customer places order on website by pressing the ‘Submit Order’ or equivalent button, or perhaps enters their card details using an automatic phone answering service.
- If the order is via a website, the customer’s web browser encrypts the information to be sent between the browser and the merchant’s webserver. This is done via SSL (Secure Socket Layer) encryption.
- The merchant then forwards the transaction details to their payment gateway. This is another SSL encrypted connection to the payment server hosted by the payment gateway.
- The payment gateway forwards the transaction information to the payment processor used by the merchant’s acquiring bank.
- The payment processor forwards the transaction information to the card association(e.g., Visa/MasterCard)
- If an American Express or Discover Card was used, then the processor acts as the issuing bank and directly provides a response of approved or declined to the payment gateway.
- Otherwise, the card association routes the transaction to the correct card issuing bank.
- The credit card issuing bank receives the authorization request and sends a response back to the processor (via the same process as the request for authorization) with a response code. In addition to determining the fate of the payment, (i.e. approved or declined) the response code is used to define the reason why the transaction failed (such as insufficient funds, or bank link not available)
- The processor forwards the response to the payment gateway.
- The payment gateway receives the response, and forwards it on to the website (or whatever interface was used to process the payment) where it is interpreted as a relevant response then relayed back to the cardholder and the merchant.
- The entire process typically takes 2–3 seconds.
- The merchant submits all their approved authorizations, in a “batch”, to their acquiring bank for settlement via their processor.
- The acquiring bank deposits the total of the approved funds in to the merchant’s nominated account. This could be an account with the acquiring bank if the merchant does their banking with the same bank, or an account with another bank.
- The entire process from authorization to settlement to funding typically takes 3 days.
Many payment gateways also provide tools to automatically screen orders for fraud and calculate tax in real time prior to the authorization request being sent to the processor. Tools to detect fraud include geolocation, velocity pattern analysis, delivery address verification, computer finger printing technology, identity morphing detection, and basic AVS checks.
Getting started processing transactions through the Online Merchant Center payment gateway is easy. This site will provide you with a description of the different processing options you have, and guide you through the steps to getting up and running quickly.
There are several methods to process transactions:
- Virtual Terminal: This is the easiest way to process transactions. No integration is necessary — simply login to the Online Merchant Center, select one of the Virtual Terminal menu options, fill out the form with your consumers account information and payment amount, and press Submit. If you already have an AcctID with Online Merchant Center, you are ready to go. Click here to login to the Online Merchant Center and start processing transactions.
- Web Link: Online Merchant Center Web Link is a secure online payment-processing check-out that allows Internet-based businesses to authorize, process and manage payment transactions without installing software on their Web site. There are no worries about the complicated software, hardware and expertise normally associated with enabling e-commerce. Click here to view more information about using Web Link.
- Shopping Cart Integration: Online Merchant Center supports most available shopping cart software so it integrates easily with most e-commerce solutions. Refer to our Shopping Cart Integration documentation for information on processing with the shopping cart you are using.
- Retail POS: Online Merchant Center supports card present credit card transactions, PIN based debit transactions, and check conversion. process retail POS transactions and take advantage of reduced card present merchant account transaction fees using our Virtual POS (VPOS) and an inexpensive credit card swipe reader or paper check MICR reader attached to your PC.
- Developer API: Online Merchant Center has multiple API programming interfaces allow your developers to integrate your custom application with the payment gateway. Integration options include SSL POST with name/value pairs, secure socket connection, and for Windows based applications a COM object is available to simplify your integration. Sample scripts are available (i.e. Perl, C++, Visual Basic, ASP) to shorten the learning curve and speed your development. Refer to our Integration Guide for detail interface specifications
- Batch Processing: Use our Batch Processing option to bulk upload transactions to the payment gateway. This is a good solution if you have an internal application that collects transactions and you would like to process them “off-line” in bulk. Using MS Excel, Access or any other program that can create a “flat file” of data that conforms to our batch processing format. Then send the file via FTP to our upload site for processing. The transactions are processed immediately, with reporting and receipt options available to notify you of the status of each transaction. This process can also be automated and scheduled. Refer to our Batch Processing Guide for more information regarding submitting batch files.
What happens when a transaction is submitted to the Fast Charge Payment Gateway?
Transaction information is collected with either a form that captures the necessary customer information (name, credit card number, etc.) from a merchant’s own secure transaction page, or via a page hosted on the Online Merchant Center secure server, for the customer to fill out.
The customer’s information is encrypted using 40- or 128-bit Secure Socket Layer technology and sent to an Online Merchant Center transaction server. The server sends the data through the authorization network to the appropriate card issuer’s bank, using a secure, proprietary connection. When the authorization process is complete — this takes around five seconds — the customer receives an approval or decline response and the Online Merchant Center server stores the transaction. Transactions are automatically settled each day and are typically funded within two to three business days.