| A payment gateway is an e-commerce application | | | | transactions between the customer and the |
| service provider solution that authorizes payments | | | | merchant. The payment gateway performs |
| for e-businesses and online retailers. It is the | | | | various tasks for the transaction process. Some |
| equivalent of a physical point of sale terminal | | | | of them are given below:o Encryption - once a |
| located in most retail outlets. Payment gateways | | | | customer places an order through a website, the |
| encrypt sensitive information, such as credit card | | | | browser encrypts that information through a |
| numbers, to ensure that information passes | | | | secure server encryption.o Payment Server - the |
| securely between the customer and the | | | | information sent back by the merchant is sent to |
| merchant. | | | | a relevant bank which acquires that information |
| A payment gateway facilitates the transfer of | | | | and then sends back the transaction information |
| information between a payment portal (such as a | | | | for authorization to the card issuing bank.o |
| website or IVR service) and the Front End | | | | Authorization - that bank then sends back an |
| Processor or acquiring bank. When a customer | | | | authorization request, either acceptance or denial, |
| orders a product from a payment gateway | | | | to the PG.o Confirmation - the internet PG then |
| enabled merchant, the payment gateway | | | | sends back the relevant information to the |
| performs a variety of tasks to process the | | | | website and the customer respectively.o Fund |
| transaction. This process is explained in more | | | | Deposit - the acquiring bank then deposits the |
| detail below. | | | | funds into the merchant's account.o Reporting - |
| Internet Payment Gateways make real time | | | | because of the internet PG facility, the merchants |
| online credit card processing possible. The data is | | | | can view their fund report online or download it |
| sent to the gateway via shopping carts and a | | | | for their convenience. Many PG also provide tools |
| secure server. When a credit card transaction is | | | | to automatically screen orders for fraud and |
| made, the payment gateway checks for validity, | | | | calculate tax in real time prior to the authorization |
| encrypts the transaction details, ensures its | | | | request being sent to the processor. Tools to |
| departure to correct destination and decrypts the | | | | detect fraud include geolocation, velocity pattern |
| responses that are sent back. | | | | analysis, delivery address verification, computer |
| How an Internet Payment Gateway works: | | | | finger printing technology, identity morphing |
| The internet payment gateway automates the | | | | detection, and basic AVS checks. |