PAYMENT GATEWAY
Muhammed Bazil C
22381027
MBA BT
DIGITAL PAYMENT SYSTEMS
PAYMENT GATEWAY
A payment gateway is a technology used by merchants to accept debit or credit card
purchases from customers. The term includes not only the physical card-reading
devices found in brick-and-mortar retail stores but also the payment processing
portals found in online stores. As long as there is an internet connection, a payment
gateway steadily connects to an e-commerce application or in-house payment
application such as a credit card processing network or an online banking
institution.
Eg:- CCA venue's mobile SDKs
• Payzippy.
• Amazon Pay
• UPI NEFT
• RTGS
Types Of Payment Gateways
1.Self-Hosted Payment Gateways
This type of payment gateway, also known as pro-hosted payment gateways,
involves the client providing card or bank details on the merchant’s website.
Customers may need to submit information in a specific format. Upon
submission, the data is then transmitted to the payment gateway’s URL. As it is
on the merchant’s website, it makes the customer experience better.
2. Hosted Payment Gateways
Hosted payment gateways direct the customer away from the site’s checkout page.
When the customer clicks the gateway link, they are redirected to the Payment
Service Provider (PSP) page. Here, the customer fills in his or her payment
details, and after paying, is redirected back to the website to complete the
checkout process
The most well-known example of a hosted payment gateway is PayPal.
3.Local Bank Integration Gateways
Local bank integration gateways redirect the customer to the payment gateway’s
website (the bank’s website) where they enter their payment details and contact
details. After making the payment, the customer is redirected back to the merchant
website, with payment notification data sent upon redirection.
4.API Hosted Payment Gateways
With API hosted payment gateways, customers enter their credit or debit card
information directly on the merchant’s checkout page and payments are processed
using an API (Application Programming Interface) or HTTPS queries.
Functions Of Payment Gateway
Secure Payment Processing:
Payment gateways encrypt sensitive cardholder data using industry-standard
protocols like SSL/TLS, protecting it from unauthorized access and data
breaches.
Fraud Prevention:
Payment gateways employ various fraud detection techniques, including realtime
validation, address verification, and anomaly detection, to minimize the risk of
fraudulent transactions.
Payment Authorization:
Payment gateways communicate with acquiring banks to verify cardholder
information and obtain authorization for transactions.
Payment Processing:
Payment gateways process authorized transactions, transferring funds from the
customer's account to the merchant's account.
Payment Reconciliation:
Payment gateways provide detailed transaction reports and reconciliation services
to ensure accurate accounting and recordkeeping.
Tokenization:
Payment gateways can tokenize sensitive cardholder data, replacing it with
unique tokens that can be used for future transactions without storing the actual
card information.
Recurring Payments:
Payment gateways facilitate recurring payments for subscription-based services
or instalment plans, automating the payment collection process.
Multiple Payment Methods:
Payment gateways support a variety of payment methods, including credit cards,
debit cards, digital wallets, and alternative payment options.
Mobile Payment Integration:
Payment gateways enable secure mobile payments through mobile apps and
mobile websites.
Application Programming Interfaces (APIs)
APIs act as intermediaries between software applications, enabling them to
exchange data and functionality. They provide a standardized set of rules and
protocols that define how applications can interact with each other. APIs play a
crucial role in integrating different systems and services, allowing businesses to
build complex applications and offer seamless user experiences.
Differences between API and Payment gateway
Base API Payment gateway
Purpose APIs are general-purpose payment gateways are
tools for exchanging data specifically designed for
and functionality between processing online
applications payments.
Scope APIs can be used for a payment gateways are
wide range of primarily focused on
applications financial transactions.
Technical Complexity APIs can range from payment gateways
simple to complex typically require more
depending on their technical expertise to
functionality integrate and manage.
