payment gateway is an e-commerce application service provider service that authorizes payments for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. It is the equivalent of a physical point of sale terminal located in most retail outlets. Payment gateways protect credit card details by encrypting sensitive information, such as credit card numbers, to ensure that information is passed securely between the customer and the merchant and also between merchant and the payment processor.
No matter how great your e-commerce store may look and function, achieving success in your online endeavor majorly depends on how well your products are being sold to your customers. And to sell products, you’ll first have to win the trust of your site visitors. A payment gateway is a powerful tool that helps to reassure visitors of your store about your trustworthiness. In essence, a payment gateway is an e-commerce service that allows merchants to accept credit card and other forms of Internet transactions securely via your website. Remember, if the payment options on your e-store aren’t set up in the right manner, you could suffer loss of orders placed on your store. This means you’ll experience a significant drop in sales, because of unsatisfied customers. Implementing the right payment gateways, however, can prove a key ensuring long-term success of your online business.
A payment gateway facilitates the transfer of information between a payment portal (such as a website, mobile phone or IVR service) and the Front End Processor or acquiring bank. When a customer orders a product from a payment gateway-enabled merchant, the payment gateway performs a variety of tasks to process the transaction.