Consumers that stumble across references to payment gateways often find themselves wondering why they are necessary. There are even some business owners who currently utilize payment gateway services that still find themselves confused on the matter. What is a payment gateway and why is it crucial for businesses trying to provide a secure method of online credit card processing for their customers?
The payment gateway simply defined is: a service provider that authorizes payments. This e-commerce application service provider is utilized by online businesses/retailers as well as brick and mortar stores. The payment gateway could be described as the point of sale terminal that consumers recognize when shopping by credit card in many retail outlets.
The purpose of the payment gateway is to protect the credit card/financial data. It is responsible for encrypting all sensitive information related to the transaction being processed (this includes the consumer’s credit card number). By using a reputable payment gateway service (like First Data Global Gateway Secure Payment Gateway), businesses can expect that all information related to the transaction at hand will be passed securely from the consumer to the merchant and from the merchant to the payment processor.
Businesses who choose to process credit card transaction manually lose several benefits provided when working with a payment gateway service:
- Fraud protection: Payment gateways notify merchants immediately if a consumer presents a credit card that has been reported as lost or stolen; preventing the transaction before it is processed. This prevents charge-backs for merchants and protects customers from fraudulent charges.
- Speed and efficiency: Merchants that conduct a large number of credit card transactions will find that working with a payment gateway significantly decreases the amount spent on transaction processing, and since time is money, most businesses find the relationship to be a profitable one.
- Less red tape: Businesses just starting out will discover that with a payment gateway the company can start accepting credit cards immediately; without the service the merchant account needs to show a positive credit history.
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