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Business

Introducing Payment Gateways – the key to secure e-commerce

Published by Jessica Weisman-Pitts

Posted on September 8, 2021

Featured image for article about Business

By Abdeslam Alaoui Smaili, CEO of HPS

Over the past years, e-commerce has experienced unprecedented growth, having a major impact on consumers & payments habits. This is mainly due to the digitisation of payments and trends, but it has also been rapidly accelerated by the pandemic.

To adapt to this ever-evolving environment, merchants need to offer a smooth and omnichannel shopping experience to their customers. As part of the shopping process, they need to provide a secure, simple and seamless payment experience.

What is a Payment Gateway?

A payment gateway is an intermediary between an online store and the processor that receives payment from a customer.

In other words, it is a transaction processing platform, connecting a website to a bank, allowing e-commerce and merchants to accept any payment type while ensuring the reliability of the data entered to finalize the transaction.

Payment gateways protect card details by encrypting the sensitive information they hold and guarantee their confidentiality and security during the purchase process.

How does the payment gateway work?

Once the payment gateway is set up by the provider, the collection of payments by the merchant is automatically authorized. Therefore, the consumer can make payments safely and easily, following four steps:

Step 1: Following the basket validation by the customer, the website directs him to the payment gateway to enter the bank details.
Step 2: The payment gateway retrieves these bank details, encrypts and sends them to the payment processor via a secure channel, after having carried out fraud checks under certain integrated security protocols, such as TLS (Transport Layer Security).
Step 3: Using the processor, banks share customer and merchant account information in order to complete the transaction.
Step 4: At this level, the payment processor verifies the successful completion of the payment and displays a confirmation message to the customer.

This means that the payment gateway is exclusively responsible for allowing the customer to communicate with the payment processor. The gateway is exactly what its name suggests: a “gateway” that routes a customer’s personal information through a secure channel to the payment processor.

Choosing the right payment gateway for your business

It is important to choose a solution that is tailored to your needs. The two options are:

The integrated payment gateway: The merchant processes customer payments directly on their website. They are solely responsible for the security and protection of their customers’ data.This option is rather adopted by large companies which have powerful technical infrastructure.
The hosted payment gateway: In this case, the payment gateway redirects the customer from the website to a provider platform to make the payment. The latter takes care of data security and PCI compliance, rather than the merchant during the transaction.

There are also three main elements to consider when choosing a payment gateway:

Security: Protecting customers’ financial information when making an online purchase is essential. The compliance with security standards, such as PCI DSS, to reduce online fraud is also a must-have.
Customer experience: The payment process should be as simple and as intuitive as possible, to make it easier for customers. It also requires flexibility to manage all types of cards and payment methods.
International acceptance: Payment gateways need to ensure global acceptance for international payment methods.

The rising number of fraudulent attempts in response to Covid-19 has increased the need for merchants to prioritise the security of payments. With card not-present transactions – such as those made in e-commerce and m-commerce – this need has become exceptionally higher. By choosing an effective and secure payment gateway, merchants can be rest assured that their customers’ payments will be protected – without compromising on the simplicity of the user’s payments experience.