What is a payment gateway and how do they function.
Payment gateways are programs that allow you to accept online payments in the form of credit cards. The payment gateway is the program that submits the transaction to your credit card processing company for verification and uses a secure line, known as an SSL, to make sure that the data transmitted cannot be intercepted or read by anyone else during the transfer process. This is why it is referred to as a payment gateway as it is merely the gateway between your website and your credit card processor.
Although it is possible to setup your own payment gateway program, it is not necessary and not advisable. Rather one should make use of a third party gateway from a reputable company. Although payment gateways do charge for their service, it is well worth it for the following reasons:
- The payment gateway company will have a better and higher level of security
than you could achieve with your own site as this is their main focus.
- The cost of designing and implementing your own payment gateway program is expensive and very time consuming.
- Credit card data does not have to be stored locally in your database, which is yet another form of security.
There are two methods by which one can configure a payment gateway. We will loosely refer to these as on-site and off-site methods.
On-site: This is when the customer enters their credit card information in the payment screen that resides on your website and this data is then stored in your database. Once the client has entered all the necessary credit card info such as billing address, credit card number, expiration date and cvv number; they then click submit and the transaction is sent to your credit card processor for verification. The success or failure result from the credit card processor is then sent back to the site and the result is recorded in your administration panel.
Off-site: When using an off-site method for accepting credit card payments; the customer enters their shipping information on your website, but not the billing information. Thus the customers order as well as their shipping information is captured and stored in your database, but not their billing info and credit card details.
Once items have been placed in the customers shopping cart, they then proceed to the shipping page where they enter their shipping information. They then click the proceed button and are directed to the payment gateway site where they enter their billing information and credit card details. The success or failure result from the credit card processor is then sent back to the site and the result is recorded in your database and can be viewed through your cart administration panel.