Payment Gateway

A payment gateway is a company that performs the validation of an online credit card purchase, and then makes the decision of whether to approve or decline the credit card transaction. The payment gateway is the system that transfers the funds from the customer's credit card into the merchant's bank account.

How does a payment gateway work?

A typical credit card transaction in an online store may go something like this:

The customer visits the merchant's online store.
The customer uses the merchant's shopping cart software (such as Modular Merchant) to add products to their cart and checkout.
On the shopping cart's secure checkout page, the customer enters their credit card information and clicks a submit button.
When the submit button is clicked, the shopping cart software makes an encrypted connection to the payment gateway, and then securely submits the credit card information to it.
The payment gateway evaluates the credit card information and decides whether to approve or decline the transaction.
If the payment gateway approves the transaction, it then debits the credit card and transfers the funds to the merchant's bank account.
The payment gateway then sends its approval or decline message back to the shopping cart software.
The shopping cart evaluates the response from the payment gateway, and takes the appropriate action, such as sending the customer a receipt for their order.

Steps four through eight above typically take, at most, just a few seconds.

When is a payment gateway required?

In order to validate and debit credit cards in real time, a shopping cart must be able to connect to a payment gateway. This is usually as simple as entering your payment gateway account information into your shopping cart's System Settings.

There are many payment gateways. Examples of just some of them include:

Authorize.net
PayPal Website Payments Pro
PayFlow Pro
BluePay
LinkPoint

Typically, the shopping cart software's communication with a payment gateway happens nearly instantly, behind-the-scenes and doesn't require the customer to leave your website in order to complete the transaction.

There are also off-site payment gateways, which require the customer to leave your website and complete the transaction on the gateway's website.

An example of an off-site payment gateway would be:

PayPal Website Payments Standard

reference

For more general information about Payment Gateways, see the Wikipedia article.

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Comments: This article has 2 user comments.

HH100Store said...	April 04, 2012 -- 2:08pm PDT
Can I use Web Connect as my payment gateway? THis is with Heartland Payment Systems.

cmarier said...	April 04, 2012 -- 4:11pm PDT
I reviewed the list of payment gateways supported in MMv4, and the list currently includes: Authorize.net, Google Checkout, Manual (offline processing), PayPal Website Payments Pro (credit card gateway), PayPal Website Payments Standard (PayPal button) and SecurePay. Additional payment gateways are evaluated on a case-by-case basis. If you have a payment gateway that you'd like to have considered, I would recommend starting a Support Ticket within your store's Administration Area and providing as many details about the payment gateway as possible, including: copies of, or links to, the gateway's integration/developer documentation and information about any "test account" area the gateway makes available for use while developing support for the gateway.

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