Payment Gateway Questions

You payment gateway questions answered by Instabill

Discover Answers to Payment Gateway Questions

An e-commerce merchant’s payment gateway is a crucial component to accepting credit card payments online. When you set up an online store, a customer’s payment has to pass through your checkout page, through the digital payment gateway for processing, and finally into your merchant account. It is something that all online merchants need in order to process orders through their website.

However, the very concept of a payment gateway can become confusing to some. Instabill links e-commerce merchants to the best acquiring banking option, which in turn, provides the payment gateway. We’ve prepared this list of frequently asked payment gateway questions we receive and provided answers to help merchants understand.

How Does An Internet Payment Gateway Work?

The internet payment gateway automates the transactions between the customer and the merchant. The payment gateway performs various tasks for the transaction process. Some of them are given below:

  • Encryption –Once a customer places an order through a website, the browser encrypts that information through a secure server encryption (Note the website’s prefix ‘https’).
  • Payment Server –The information sent back by the merchant is sent to a relevant bank which acquires that information and then sends back the transaction information for authorization to the card issuing bank.
  • Authorization –The bank then sends back an authorization request, either acceptance or denial, to the payment gateway.
  • Confirmation –The internet payment gateway then sends back the relevant information to the website and the customer respectively.
  • Fund Deposit –The acquiring bank then deposits the funds into the merchant’s account.
  • Reporting –Because of the internet payment gateway facility, the merchants can view their fund report online or download it for their convenience.

This may seem like a long process, and it is, but it takes only a few seconds.

For a merchant, doing business online has now become an easy process. An internet payment gateway allows the business owner to process all kinds of credit cards online.

What Does A Payment Gateway Do?

This is among the most popular payment gateway questions. Internet Payment Gateways make real-time online credit card processing possible. The data is sent to the gateway via shopping carts and a secure server. When a credit card transaction is made, the payment gateway checks for validity, encrypts the transaction details, ensures its departure to the correct destination and decrypts the responses that are sent back. It is very useful for e-commerce businesses.

What Does A Virtual Terminal Provide?

Payment gateways provide users with a virtual terminal. It allows hosting terminals for multi-user networking. A virtual terminal also provides an online reporting facility for all the transactions and orders made. Through secure servers, the merchants can log in to a website and process credit cards, perform authorizations etc.

Virtual Terminal allows:

  • Easy usage – The virtual terminal is fast, reliable and easy to use online.
  • Manual Credit Card Transactions – With this feature, the merchants can now manually enter the credit card details to facilitate transactions. This is feasible for phone, fax and mail orders.
  • Cost Effectiveness – Merchants can now save money and reduce cost by using the virtual terminal. With this, they no longer require exclusive tools and fancy equipment.
  • Refunding – Virtual terminal allows the merchants to refund the money to a customer’s credit card.
  • Security – It provides safe and secure servers (SSL) and reliable protection system.
  • Automatic Billing – Virtual terminals enable for automatic billing. Merchants can now automatically bill their customers, especially for recurring charges.
  • Increased Sales – The virtual terminal allows the users to expand their business beyond the e-commerce world, as it is used for phone and fax orders as well, allowing the users to gain access to more users.
  • Reporting – Running various reports have now become possible through the virtual terminal. Merchants can now also check the status and capture the previously authorized transactions through this facility.
  • Convenience – With the virtual terminal’s reporting facility it has become more convenient for the merchants to get automated services.
  • The virtual terminal acts as an intermediary between the merchants and their merchant accounts. It is a web interface, which allows the merchants to enter the customer’s details manually into a browser and submit them for fast authorization and processing.

Advice When Requesting a Virtual Terminal

We receive payment gateway questions each week about the use of a straight virtual terminal for processing payments. We fear the days of solely using VTs to accept transactions are coming to a close. Most of the acquiring banking partners with which we’ve been partnered mandate merchants have a website, enabling them to see what merchants are selling.

As we’ve long processed credit cards for industries such as online nutraceuticals, pharmaceuticals and subscriptions, these very industries are also attractive to criminals who attempt to – and often succeed – commit transaction laundering, the act of selling legitimate products and services online to cover for selling narcotics or other illegal goods or services.

When merchants request the use of a virtual terminal with Instabill, we implore them to provide us with the proper KYC documents, most importantly to have 3-6 months of business bank statements and credit card processing history; to provide identification for each of the owners; and to do so in a timely manner.

What Is A Payment Gateway?

In order to process credit card transactions online, a database is created that immediately checks the transaction and then captures the funds to be deposited later in the merchant’s account.

What Is An Online Payment Gateway?

Payment Gateways are usually a third party service that automates the transactions between the customer and the merchant. A payment gateway is a system that processes, verifies and accepts the credit card transactions on behalf of the merchant. Business owners are able to accept all kinds of electronic payment through these secure internet connections.

What Is A Virtual Terminal?

A Virtual Terminal, also known as VT, is a service that allows manual processing of credit card transactions through means of an electronic connection.

Why Get An Online Payment Gateway?

Payment Gateways make real-time online credit card processing possible. When a credit card transaction is made, it checks for validity, encrypts the transaction details, ensures its departure to correct destination and decrypts the responses that are sent back.

A Payment Gateway also helps you to accept:

  • Credit Cards – it allows the clients to get real-time credit card authorization either via secure servers or via HTTP with payment gateways.
  • Electronic Checks – many payment gateways also help process electronic check transactions online or in real time.

The customers do not need to be directly in contact with the gateway, as the data is sent to the gateway via shopping carts and secure server. The shopping cart uses plug-ins to send information to certain gateways in an acceptable format.