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How do Payment Gateways Work?

The current pandemic has encouraged more merchants to explore digital markets. However, online fraud is not an alien concept when it comes to virtual businesses. Therefore, reliable online payment gateways have become more of a necessity than a luxury. Therefore, it is important to understand the mechanisms involved to make an informed decision about whether to invest in it or not. Visit us: paymentasia.com

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How do Payment Gateways Work?

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  1. How do Payment Gateways Work?

  2. The current pandemic has encouraged more merchants to explore digital markets. However, online fraud is not an alien concept when it comes to virtual businesses. Therefore, reliable online payment gateways have become more of a necessity than a luxury. Therefore, it is important to understand the mechanisms involved to make an informed decision about whether to invest in it or not.

  3. Bridging the customer and the merchant

  4. Online payment gateways act as a bridge to link the transaction process for customers and merchants. The first step is to provide multiple options on the payment page. The best payment gateway options are tailor-made based on the needs and requirements of the business. It could include a hosted payment page that collects transaction data before passing it on to the acquirer, reducing the PCI burden.

  5. Other options, such as direct server integration and encryption at source, strengthen the security of the online transaction both for merchants and customers. Online gateways provide varied payment solutions in Malaysia and other overseas markets to enhance the merchant’s business. Therefore, it also has multi-currency solutions and other payment options, including eWallet payments and cryptocurrency, for easy transactions.

  6. Securing details to analyze the business

  7. Once the customer enters their card details, it is processed by the online payment gateway to secure its details and conduct fraud checks. It protects merchants from falling prey to fraudulent transactions and suffering any losses. Along with other methods, PCI security is used to encrypt data between parties. Once the details are secured, and the checks are run, card details are passed on to the acquiring banks. It is essential at this point to convert the message to a format processed through EFT switches.

  8. Card security and processing

  9. The data is then passed on to card schemes that perform a second fraud check. This eliminates any possibility of the transaction being exposed to fraudulent activities and secures the merchant’s details. The data is then transferred to the issuing bank. The bank performs another screening before authorizing the transaction. A statement of approval or rejection is then sent to the acquirer from the card schemes. This step by the online payment gateway system is an iron-clad protection scheme for the merchant’s business.

  10. The final lap in the working mechanism

  11. The final step by online payment gateways is transferring the message to the merchant via the acquiring bank. After collection of the amount, the funds are held in the merchant’s account. These funds are deposited as per the agreement between the merchant and the online payment gateway. If the payment is approved, the merchant will display the confirmation message. In case the payment is not approved, the website could ask the customer to provide other payment options to make the purchase. Thus, as you can see, the entire process is well thought out and safe.

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