What is a payment gateway and why is it used?

What is a Payment Gateway ?

Payment gateway as the name suggests is an application / service which is used to process payments for online shopping websites.

Payment gateways are integrated with e-commerce websites and can be selected as a mode of payment in checkout page.

Payment gateways are now a day provided by all Financial Banks. There are many other companies which provide payment gateway service for e-commerce stores.

Payment gateways provide access of their service to the developers by means of API. These APIs are compatible with all major programming languages like c#, php, java etc.

Payment gateways companies mostly require a “Current Account” of e-commerce Company to process the payment from their websites.

When users select online payment option on checkout page, they are redirected to the payment gateways page where users are asked their payment option credentials. Most common modes of payment are

• Credit Card,
• Debit Card and
• Online Banking.

When payment is completed the money is deducted from customers account and is transferred to the payment gateway company. User is redirected to the “Successful Payment” page in the website.

Some Payment gateway companies hold the payment until the e-commerce provider marks the order as complete.

All payment gateway companies must have authorization from the main national governing body of financial operations.

If payments are made by users from different country (currency) then conversion charges and a particular percentage of amount of transaction is taken.

There are various plans by payment gateway companies. Percentage commission varies from plan to plan and mode of payment used. For eg: Percentage commission when a user makes payment using credit card is different from percentage commission when payments are made using online banking.

List of Famous Payment Gateway Companies

International :-

1. Paypal
2. Payoneer
3. com
4. Securepay

India : –

1. Payu Money
2. CCAvenue
3. Billdesk – For Large E-commerce business
4. Hdfc Payment Gateway
5. ICICI Payment Gateway