A payment gateway is an online system for processing credit card or other payment transactions in real-time and is linked to a merchant account. The gateway uses a computer to process, verify, and accept or decline credit card transactions on behalf of the merchant through secure Internet connections. The payment gateway facilitates the coordination of communicating a payment transaction between the various back end payment networks or banks. Every time a credit card transaction is made, it needs to be processed through a payment gateway although many online merchant account providers now include a payment gateway when you sign up with them so you only need to deal with one company.
There are two types of payment gateways available;
Manual: Requires manual processing of the credit cards. There are both advantages and disadvantages. The main advantage is security and the lowered risk of fraud and hence a chargeback. By manually processing the transactions you are more likely to find an attempt at fraud. Also, by manually processing the credit cards no card details are stored on servers on the web making it harder for thieves to steal the card details. This helps reduce overall fraud.
The disadvantage is that is takes longer and if you are processing thousands of payments then it is going to take a lot of man hours.
Real Time: Real time payments are received automatically so you get the money quickly and don’t have to manually approve each transaction. There are more risks that the gateway will accept a fraudulent transaction but you don’t have to do anything which saves you time and labour.
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