How Has The Rise Of E-Commerce Led To Increased Use Of Payment Gateways? - Top Entrepreneurs Podcast

Did you know? The overall market size of payment gateways stands at 27.3 billion USD. It is likely to increase by 138.5 billion USD by 2032, which shows how widely they are used by businesses both offline and online.

It saves the company time and effort, as everything is recorded on the digital platform, and the chances of fraud and theft are severely decreased. Hence, gateways are present in every store and online platform.

Consequently, today, we will discuss how the payment gateway process works and ensures a safe transaction of funds.

a person holding a remote control in front of a laptop — Source: Unsplash

What is an E-commerce Payment Gateway?

The E-commerce payment gateway deals with the transfer of money between buyers and sellers. It enables e-commerce websites to ask your bank to authorize your payment for the commodities you seek to buy. Later, as it gets approved, the funds move to the e-commerce bank quickly and in a secure way.

To run any e-commerce business, a payment gateway is important to ensure that customers can make payments safely and quickly. The less waiting time in the payment section, the more chance you have to acquire customers. Therefore, it is necessary to have the best payment gateway partner or Embedcard, which offers free payment gateway consulting, do the job for you.

How the Process of Payment Gateway Follows?

The payment content can be different for different sites. However, the process of payment or transfer of funds remains the same. Here is how the process of payment gateway works –

Step 1: Payment Details

During the checkout, after you have selected the product you want to buy, you confirm the billing address and its price. Later, you can submit the order by clicking the pay now option. That way, the page will direct you to the payment section, the payment gateway page. All the details about the payment will pop up to let the platform take over and complete your transaction.

Step 2: Sent Request to the Bank

In the next step, the payment gateway requests your bank to authorize the payment after the merchant asks for payment completion. Later, your bank will receive your request, look into your account, and check your balance. For this, you need to put your card number and let the transaction follow through. That way, the bank can respond to the payment option and allow the process to happen. For the process to happen properly, you have to wait for 2 to 3 seconds.

Step 3: Bank to Merchant Payment

In the last step, your bank approves your payment after completing the authorization process. The bank does a checkup both in terms of the merchant and the money present in your account. After the bank approves, it deposits the money to the merchant’s bank and ensures that the payment is completed in the rightful way. Later, it reaches the business account of the e-commerce company.

Step 4: Through the Payment App

Lastly, if you choose to make the payment through a payment application like Apple Pay, PayPal, or Google Pay. The payment gateway sends a request to your payment application and asks you to approve the request and pay the price. That way, the payment is made faster, and you can control the proceedings. So, when you pay the price, your bank approves it, and payment reaches the merchant.

The Bottom Line

In the end, the payment gateway is the best way to improve and secure your payment process. The addition of a third party ensures the payment is done smoothly, and customers don’t have to wait more than 3 seconds.

So, you can look at the above to see how the payment gateway works.

FAQs

Here are a few frequently asked questions:

Why should we use a payment gateway? E-commerce websites use a payment gateway to severely reduce the risk of credit card fraud.

Why do businesses need payment gateways? Payment gateways act as middlemen that facilitate the transfer of money between a customer and a seller.

What is required for a payment gateway? Proof of a business address is required to build a payment gateway.

Who is responsible for the payment gateway? The third party or the payment service provider is responsible for the smooth functioning of payment gateway platforms.