What is a payment gateway?
A payment gateway is a separate service and acts as an intermediary between the merchants’ shopping cart and all the financial networks involved with the transaction, including the customers’ credit card issuer and your merchant account. Think of it as a EFTPOS terminal in cyberspace. It checks for validity, encrypts transaction details, ensures they are sent to the correct destination and then decrypts the responses which are sent back to the shopping cart.
This is a seamless process and your customer does not directly interact with the gateway; as data is forwarded to the gateway via your shopping cart and a secure (SSL) connection. The shopping cart is configured via plugins to send information in a format that is acceptable to the particular gateway.
The proper choice of payment gateway is another vital element which will contribute to your success or failure as an online business
Since the payment gateway is the secure connection and transmission of the orders through to banking networks, it is independent of the interface (point of sale software or catalog/cart) that you use to transmit the order information through the payment gateway
How will I know when I have an order?
When using a payment gateway system in connection with the cart, you will receive all of your orders via e-mail. As a merchant you will receive 2 e-mail messages, the first is generated by the cart, and supplies you with the necessary information to fulfill the order, such as names, addresses, and items ordered. The second will come from your payment gateway, and will tell you the status of the order approval. You should wait to ship a product until you have received this order status message
What if the customer’s payment method is declined?
If you receive a declined message from your gateway regarding an order, you will need to contact the customer and ask for alternative payment. The customer will not receive notification via e-mail of the approval status.
What about the security of E-Mail?
All information pertaining to credit card payment is stripped from all e-mail before being sent out.
Payment Gateway Issues
As with any other ecommerce element, shop around, compare prices and read the fine print. Here are some of the major points to consider when selecting a payment gateway service.
- If you have already purchased a shopping cart package, ensure that the payment gateway service is compatible. If a service is not listed, contact the shopping cart vendor for clarification. Many vendors would be happy to support other payment gateway services if there is a demand for it.
- If you haven’t yet selected a shopping cart, get a list of supported applications from the payment gateway service provider. A payment gateway may offer great pricing, but if the range of shopping carts or storefront software it supports is limited, the whole process of setting up for taking online payments may cost a lot more than you think. I’ve noticed some gateways only support horribly expensive and restrictive shopping cart software packages and services.
- Ensure the gateway at least offers AVS protection. The Address Verification System (AVS) AVS decreases the incidence of accepting fraudulent transactions by verifying the cardholder’s billing address with the card issuer. Using AVS on your transactions may also benefit you by a reduction in fees charged by your Merchant Bank.
Check to see what other types of transaction protection are offered to you as a merchant. These will probably be ‘premium’ services, the charges added to the basic servicing fees, but dependent on your products may be absolutely necessary. If you are engaged in the sale of anything that is youth or technology oriented, it’s probably a wise move to pay for the extra service as chargeback rates on fraudulent transactions can cost you around US$30 per incident! For a rather disturbing report and some strategies regarding this issue, view:
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