Credit Card Processing With an Online Payment Gateway

Online payment gateways are a type of software application that allows an eCommerce merchant to handle transactions going from their website to a bank that will authorize the customer’s credit card payment. Beyond credit cards, an online payment gateway can also process debit card payments. Its main function is to transmit the sensitive bank account data from the customer’s computer to the customer’s issuing bank, as well as any other parties that may be involved in the transaction.

Since there’s no way to swipe the magstripe or read the EMV chip on the credit card, this transaction will be processed as a “card-not-present” transaction, meaning the processing rate will likely be higher because of the increased risk that comes with not being able to physically verify the credit card and its owner’s identity.

Does My Business Need an Online Payment Gateway?

An eCommerce payment gateway functions in much the same way as a credit card terminal that you would use in-person in your retail store or service business to process transactions. However, there are a few main differences that can help you determine whether or not an online payment gateway will suit your business:

  • Transaction data can only be transmitted via an internet connection, while most traditional credit card terminals are able to use both the internet and cellular data to send and receive data.
  • You may be charged extra by your merchant account provider to add on an online payment gateway service. Typically, you will have an additional monthly fee for the gateway, as well as setup fees to integrate the gateway into your website.
  • In addition to transmitting credit and debit card transaction data, payment gateways also offer features like payment information storage. This allows you to build up a database of customer information so they can conveniently choose a previously used card when they come back to your website.
  • Online payment gateways securely encrypt all credit card transaction information, storing it separately from your website, thereby providing a further layer of security. This assists with PCI compliance. All sensitive credit card information is also encrypted as it is transmitted to the processing bank.
  • If your business offers subscription-based pricing, payment gateways offer a recurring billing feature that will automate this process. You can completely customize billing intervals and set up trial periods for subscriptions.
  • Most of the popular payment gateways are generally “plug and play,” meaning you can set them up on your website without the need for complicated coding or development work.

An online payment gateway is clearly essential for pure eCommerce businesses, or businesses that combine both a retail and online shop. But if you have a strictly retail business that makes use of traditional POS systems and credit card readers, you may still benefit from a payment gateway. By running a virtual terminal on a laptop, desktop or tablet computer, you can process credit card payments via the web. If you add a smartphone card reader, you can even swipe credit cards without the need for a dedicated point of sale system!

For more information on online payment gateways and how your small business can take advantage of this technology, reach out to MALAQY today!

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