What exactly is a Payment Gateway?
Invoicing and payments are essential steps for merchants, whether they own a brick and mortar business or an online store. A great checkout experience can help you earn money efficiently; electronic payment gateways help you do just that.
An electronic payment gateway is a platform that is used to process customers’ transactions through any of their payment instrument and ensures that funds are transferred to the merchant. It allows a customer to submit their payment details, which are then securely passed to the bank, which validates and authenticates the customer before responding back to the payment gateway. The payment gateway further relays bank’s approval or decline to the business who then processes the order against which the invoice was generated.
How Payment Gateways Work; A Three-Step Guide:
Like a physical checkout, the payment gateway also goes through a number of steps in order to carry out a secure transaction. Here is an easy description of how an ePayment gateway works:
1) The Beginning of the Check-out
A customer would go through the merchant’s website, search for their preferred products/services and adds them to their checkout cart or just access an invoice that needs to be paid. After they do so, they proceed towards the checkout. After reviewing their order details and filling in other details such as name, address, etc. they confirm the order by pressing the “Order” button. Once done, the customer proceeds towards making the payment for the selected products/services. The customer selects a payment option amongst the many that the payment industry offers such as Account, Card or Wallet. After selection of instrument customer inputs instrument details depending on the selected payment method by the customer
2) Payment Gateway Comes into Action
This is when the payment gateway starts doing its work. The payment gateway will send the payment information to the customer’s bank. The bank receives this request and checks if the customer possesses enough funds to fulfill the transaction. If the details are valid, the bank issues an OTP to validate its customer. The customer usually receives the OTP on its registered contact details with the bank like mobile number or email address. The customer is required to enter the OTP received to authenticate the transaction. Based on the validation of the payment details and the authentication the bank responds to the payment gateway indicating if the purchase request has been accepted or denied. If denied, the reason for it is also mentioned. The payment gateway forwards this response to the merchant. The communication between the merchant and payment gateway can be done directly or hop through intermediaries such as acquirers or aggregators.
3) After Payment Approval
Once the customer’s payment has been authorized, the authorization is sent again via the payment gateway to the merchant. As fascinating as it sounds, all of this procedure is completed in a matter of seconds. The actual funds are settled to the merchants according to the settlement cycles of the payment gateways.
Payment Gateways in Pakistan.
E-commerce has become a big deal in Pakistan as well. As it is its early stage, more and more businesses are hopping on the bandwagon of e-commerce for trade. Pakistan being the 46th largest E-commerce market with estimated revenue of USD 4 Billion, secures a place ahead of Peru. Despite being fairly new in the game of e-commerce, the online market just keeps expanding and the trend of online shopping is increasing drastically. All this makes it more important than ever for merchants to opt for a quick, secure, and encrypted electronic payment gateway for processing digital commerce transactions both locally and globally.
Payment gateways can significantly help you as a business or merchant to collect payments against digitalized invoices. There are many emerging payment gateways that can help you out such as NIFT ePay which provides multiple payment instruments and methods for payment collections.
NIFT ePay enables merchants with business payments that are smooth and occur in real-time without any hassle. It also helps entities to capture data and use it in an efficient way like keeping track of transactions or setting receivables. As an online business trying to establish themselves in the competitive and fast-paced world of e-commerce, opting for reliable gateway is a must.