Understanding the Payment Gateway of Merchant Accounts

Understanding the Payment Gateway of Merchant Accounts

One of the applications thatmerchant accounts offer is a payment gateway. As the term already implies, it is the payment gateway that is responsible for sending information from the merchant or retailer to the payment processor and, in turn, to the credit card association. The payment gateway is used by business owners with Internetmerchant accounts; those with retail accounts use a point-of-sale terminal, a physical program on the computer that is connected to the physical credit card terminal.

Basically, the payment gateway ofmerchant accounts has three main functions. First, it functions as the one that authenticates credit card transactions. Second, it allows the merchant to send its transaction for payment processing and finally, it protects the information transmitted.

But how does the payment gateway work?

It first functions during the verification process in credit card processing ofmerchant accounts. When a buyer buys an item online, the information the buyer sends is sent to the web server of the merchant. The merchant then forwards this information using the payment gateway. Both of these processes are encrypted by a Secure Socket Layer to ensure that it is protected. This ensures that the information sent cannot be acquired by a third party.

Once the payment gateway receives the information, it sends it to the financial institution's or the bank's payment processor. It is then the processor's responsibility to send this information to the credit card associations. The card associations verify and authenticate the transaction and inform the processor if the cardholder has sufficient credit to purchase the item. If the transaction is valid (in terms of the card's financial capacity), the card association sends the information to the processor. The processor, in turn, sends the information back to the merchant. This is how the payment gatewayauthenticates a credit cardall in a matter of seconds.

The same process applies when the merchant authenticates the credit card transactions for payment. The payment gateway ofmerchant accounts sends the transaction information per batch to the processor. This, on the other hand, takes two to three days. Needless to say, the payment gateway is an important part of thecredit card processing procedure. In fact, it is the core.

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