What Is a Payment Gateway?

what is a payment gateway

Imagine what you could accomplish through your company when you properly manage your finances. Not only will you take your performance to new heights, but you can also avoid becoming one of the 20% of small businesses that fail within their first year.

Handling your money the right way involves more than proper budgeting, though. It also requires you to implement the right global payment solutions.

Not everyone understands how to get started, but it’s easier than most people anticipate. So, what is a payment gateway? Let’s explore the key information you need to know.

What Is a Payment Gateway?

This is a type of technology that merchants use to accept credit or debit card purchases. The term refers to physical card-reading devices and online payment processing portals.

Without the right payment gateway in place, you risk being unable to accommodate certain types of payments from your customers. This can lead to a large number of issues, such as having them turn to a competitor instead. In scenarios like these, they’ll be unlikely to return to your business in the future.

How Do Payment Gateways Work?

In the past, this technology would read the magnetic strips on credit and debit cards. The merchant would then require a signature from the customer to verify their purchase.

With the advent of chip technology, this process was refined into the PIN method. Users would enter this number into the hardware instead of providing their signature. Eventually, technology advanced to the point where users could tap their cards against the payment gateway to facilitate their purchases.

It’s even possible to purchase goods and services with your smartphone. Your phone wirelessly transmits payment information to the card reader.

Payment gateway architecture and functionality will vary depending on the business. Online payment portals require an application programming interface (API) for the company’s website to communicate with the payment processing network.

In-store networks will use a point of sale (POS) terminal to connect to the payment processing network. This connection can use either a phone or the Internet.

Payment Gateway vs Payment Processor

Many people use these interchangeably, but they’re distinct from each other. A payment processor is a service that connects the customer’s bank account to a merchant account.

It then facilitates the movement of the money. You can think of both of these as two halves of the same transaction. A payment gateway collects the customer’s payment information before the payment processor uses that info to contact the customer’s bank.

White Label Payment Gateways

These allow merchants to provide online payment solutions or mobile payment solutions with customized branding. To clarify, you can modify the payment gateway’s details to align with your branding strategy. Nuances like these can be great ways to improve the overall customer experience.

Building a Payment Gateway

It’s possible to build a payment gateway on your own. With enough time and resources, many businesses would eventually complete this project.

However, it’s impractical in most scenarios. Not only is it time-consuming and expensive, but you also risk handling it incorrectly. This could lead to issues with your performance, and you might even encounter legal problems.

To clarify the latter, your gateway might improperly store or protect consumer data. The Equifax data breach is a great example, as their inadequate protection resulted in a class-action lawsuit. Their reputation also never fully recovered.

It’s worth noting that certain pursuits are virtually impossible without professional guidance. Facilitating foreign transactions, for instance, is a complex process that you’re unlikely to handle on your own.

Are They Secure?

When configured properly, payment gateways will keep data protected and facilitate secure transactions. This is an essential benefit to have, as the cybercrime industry is estimated to cost the world over $10 trillion annually by the end of 2025. Modern payment gateways use sophisticated software and tools to keep information as safe as possible.

One of the most prominent is fraud detection. This automatically detects suspicious activity and aims to block fraudulent transactions. As this technology advances, it will be less likely to mistakenly identify fraud.

Finding Merchant Choice Payment Solutions

Not all payment solutions are created equal, and it’s imperative to do your research before making your choice. See what other people have to say online about their experiences. Were they satisfied with the results they got?

Did they encounter issues the provider couldn’t help them overcome? The answers to questions like these will help you narrow down your decision.

It’s also important to consider their pricing structure. You tend to get what you pay for, which means you should avoid the cheapest options you encounter.

However, this doesn’t mean you need to work with the most expensive firm. there’s a point of diminishing returns regarding what you get from your budget. somewhere in the middle of the industry’s price range is often the best choice for your needs.

Are they enthusiastic about helping you? Never work with someone who doesn’t seem to care about bringing your vision to life.

You can assess their enthusiasm by paying attention to how many questions they ask about your project. Ideally, you’ll find someone who wants to know as much as possible. Their level of experience will also play a role.

New companies aren’t guaranteed to fall short of your goals, but they’ll be less likely to reach them. Keep this in mind when moving forward. With enough due diligence, you shouldn’t have an issue finding the right provider.

Get Started ASAP

If you don’t have your payment system configured already, it’s imperative to take action as soon as possible. The answer to “What is a payment gateway” will help you avoid issues you may have otherwise encountered and take your performance to new heights. Just make sure you research the solutions you choose.

Trinity Payments prides itself on handling your payment solutions so you can focus on other areas of your business. We’re PCI compliant, allowing us to keep your payments optimized and secure.

Trinity also strives to exceed all expectations and discern ways we can further improve your business. You’ll learn more about our benefits when you get in touch with us today.

Get Started Today!

If you’re in the market for a new payments partner, want to upgrade your systems, or just need to ask a few questions, our dedicated team is here to help. Try us on for size.