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How to Integrate a Payment Gateway into a Website

By: William Dawsey

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Shoppers are expected to pay for merchandise that they would like to purchase from a brick and mortar store. This is typically accomplished by swiping a credit card at a point of sale (POS) device physically located within the store. In many cases, payment can also be made by using cash or an app on a smartphone.

In a similar fashion, there has to be some way for an online buyer to pay for merchandise at the time of purchase. Otherwise, the sale cannot be completed. Such online transactions are made possible by the use of a payment gateway. In addition to credit and debit cards, some payment gateways are able to process automated clearing house (ACH) transactions and cryptocurrency payments.

What is a Payment Gateway?

A payment gateway is a software application or service that processes credit cards and other types of payments for ecommerce stores and businesses in much the same way that a POS device does for a brick and mortar store. It must be able to encrypt payment information to ensure that credit cards and other payment instruments are protected and that the transaction between the merchant and the customer is successful.

While the concept may be simple, some of the operations are not. For instance, the payment processing software has to be able to send transaction information to the appropriate source for approval and then relay the response back to the store. This is how the store knows whether the transaction is approved or denied.

What is a Payment Gateway

How Does a Payment Gateway Work?

You can think of a payment gateway as a virtual bridge that connects a customer with an online business or ecommerce store. It is the final step in the sales process. For security purposes, payment gateways encrypt the data they transmit. Some automatically look for fraud and add tax. Here are some of the individual steps performed by payment gateways:

  1. The customer places an order by entering their credit card information and clicking on "pay now" or equivalent.

  2. The customer's web browser uses secure socket layer (SSL) to encrypt the credit card information for security purposes.

  3. The merchant forwards the information to the payment gateway using SSL.

  4. The payment gateway forwards the information to the appropriate payment processor.

  5. The payment processor forwards the data to the appropriate credit card association.

  6. The credit card association evaluates the request and sends an answer back to the payment processor.

  7. The payment processor forwards the answer to the payment gateway.

  8. The payment gateway forwards the answer to the customer and to the merchant. At this point, both the customer and the merchant know whether or not the transaction was approved.

  9. At a later time, the merchant sends all approvals to the credit card company in batch form.

  10. The credit card company transfers funds to the merchant for all credit card transactions that were approved.

How Does a Payment Gateway Work

Why You Need a Payment Gateway:

If you have an existing website or hope to have a website in the future that accepts online payments, you will need to have a payment gateway. One reason for this is that all online credit card transactions are presently handled by payment gateways. There are no acceptable alternatives. Therefore, you must have one in order for your customers' orders to be approved and for you to receive your money. You will also need one if you plan to use a mobile phone to accept payments.

How to choose the right gateway for your ecommerce website or app:

1. Hosted Payment Gateways

There are basically two types of payment gateways: hosted payment gateways and integrated payment gateways. Hosted payment gateways redirect a customer to the platform of a host network where the customer inputs his or her information. PayPal and 2Checkout are examples of hosted payment gateways. One pro of a hosted payment gateway is that the host is responsible for security issues. Also, a hosted payment gateway is very easy to set up. However, a con is that these gateways are not preferred in some countries. Another con is that some of these gateways tend to be slow, which can negatively affect conversion rates.

2. Integrated Payment Gateways

Integrated payment gateways use an application programming interface (API) to connect your store or business to gateway services. Also referred to as non-hosted payment gateways, providers make direct payments through your online store. Pros include a pleasant payment process for your customers due to the fact that they are not redirected outside your store. Such gateways are also mobile friendly. Cons include the fact that your website is responsible for a good portion of the security. If your website sustains a breach, you may be subject to an audit. Also, your store architecture may require some tweaking in order to support some the gateway provider's features.

How to choose the right gateway for your ecommerce website or app

How to integrate a custom payment gateway into a website or app:

The exact steps for payment gateway integration will depend on the gateway chosen. However, there are several common steps. For instance, if you choose to go with a hosted payment gateway, you will need to connect your website to the gateway and get an SSL certificate. You will also need to obtain the gateway's credentials, including the merchant's ID, MWS access key and secret key. You should be able to do a great deal of customization to make the payment process look the way you want it to.

If you use an integrated payment gateway, the first thing you will need to do is make sure that your security measures are adequate. However, you should be able to accomplish this by using some of the extensive APIs and modules that are readily available. Otherwise, you may have to depend on custom payment gateway development to integrate the payment gateway into your website. You will also want to make sure that your payment gateway will accept a variety of payment options and that mobile phone users are accommodated.

Conclusion

If you are in the market for a payment gateway, you might want to check out the services provided by Chetu. They are a leading provider of customized software and can help you customize and install the payment gateway software that would be the best fit for your business or ecommerce store.

Disclaimer:

Chetu, Inc. does not affect the opinion of this article. Any mention of specific names for software, companies or individuals does not constitute an endorsement from either party unless otherwise specified. All case studies and blogs are written with the full cooperation, knowledge and participation of the individuals mentioned. This blog should not be construed as legal advice.

Chetu was incorporated in 2000 and is headquartered in Florida. We deliver World-Class Software Development Solutions serving entrepreneurs to Fortune 500 clients. Our services include process and systems design, package implementation, custom development, business intelligence and reporting, systems integration, as well as testing, maintenance and support. Chetu's expertise spans across the entire IT spectrum.

- See more at: www.chetu.com/blogs

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