Why an online payment gateway is needed
You’ve set up your online e-Commerce website, ready to announce your products’ benefits to the whole world. You’ve acquired your own online merchant account, prepared to eagerly accept your customers’ credit cards. However, one thing is missing. Before you can process your credit card orders and reap untold profits, you need an Internet payment gateway.

Most online merchants see it fit to have a shopping cart software installed before they incorporate an Internet payment gateway. A shopping cart lets your customers select the products they need from your site, and later allowing them to customize as well as finalize their orders. Shipping and billing information is needed upon checkout after which the online payment gateway records the transaction, encrypts the transaction details and then proceeds to send the information to the credit card processor. Within a short time, the merchant will receive a notice whether the transaction has been approved or declined.

As you can see, a merchant’s Internet payment gateway does not interfere in the transaction – the customer hardly knows that it is there! The shopping cart sends the details to the gateway via a secure connection. Now that you know how an online payment gateway roughly works, let’s go into details about its three main roles, namely authorization, settling and reporting.

Authorization
It is important to know that before any online purchase can be made via a credit or debit card, it must first go through the card issuer. Before getting the green light from said card issuer, the online payment gateway must check that the credit or debit card is valid or acceptable. The gateway acts as a highly effective link (not unlike a super duper efficient postman) between a merchant, his customer and the credit card processor. With it, the credit card transaction can be proceed immediately – all in the span of 2 seconds!

Settling
Besides acting as a efficient link, the online payment gateway also collates a merchant’s daily transactions and ships them off to the bank in one go. Again, like a postman, the payment gateway sends the transactions to the bank so that the merchant will be able to obtain funds which are later deposited electronically into his bank account. This process is called settling, and it normally takes all of two business days before the merchant is able to enjoy his hard earned cash.

Reporting
Thanks to an online payment gateway’s reporting facilities, merchants can keep track of their transactions easily and without hassle. Gone are the days of endless stream of papers depicting your daily transactions – with these online reports you can view them anytime you like and print them for future reference. Check out which payment gateways are compatible with Quickbooks – this can really save you accounting time and fees!

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