A merchant payment gateway authorizes payments for online businesses, acting as an intermediary between the seller’s shopping cart and financial entities. It provides security through encryption and complies with industry standards. The reliability of the service provider is crucial.
A merchant payment gateway is a software system that authorizes payments for online merchants and businesses. It is often seen as the Internet equivalent of a point-of-sale terminal, or cash register, found at points of sale. The purpose of the system is to ensure that information exchanged between merchant and consumer is processed in a secure and timely manner. While a merchant payment gateway is often associated with e-commerce, it can also be used for traditional traditional transactions.
Acting as an independent service, it is perhaps better to describe a merchant payment gateway as the intermediary between the seller’s shopping cart and the financial entities involved in the transaction. This usually includes the seller’s account and the buyer’s credit card company. During credit card processing, the gateway helps with verification and provides security by encrypting the financial information used in the transaction. Once validity is verified and details are sent to the requesting party, they are decrypted and returned to the merchant’s shopping cart.
Most of the time, the action that a merchant payment gateway performs is a transparent process that requires no further intervention from the buyer or seller. After the consumer completes his order, the merchant’s shopping cart transmits this data to the gateway over an encrypted connection. This system is completely independent of the interface that customers use to transmit their order information and, as such, provides security for monetary transactions.
When integrating a merchant payment gateway with a shopping cart, the merchant typically receives notification of all orders via email. There are usually two messages. One is generated by the shopping cart software and provides information about the customer and other details needed to fulfill the order. The second email is sent automatically by the payment gateway. This message provides the merchant with updates on the order approval status. Merchants are encouraged not to place orders until this second message has been received.
The overall reliability of a commercial payment gateway largely depends on the quality of the service provider. This is very important as it is up to the service provider to ensure security through the use of industry standard data encryption. It is also the vendor’s responsibility to provide a solution that complies with Payment Card Industry (PCI) standards and other regulations. There are numerous service providers on the market, with Authorize.Net and Verisign being two of the most credible examples.
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