How Payment Gateway Works

A payment gateway is used to process electronic transactions, including credit and debit card purchases. It is the equivalent of the physical POS (point of sale) terminals found in traditional retail establishments.

Payment gateways can be used by retailers of all types, including store-based, online and “bricks and clicks” (combination of traditional and e-commerce). What follows is a concise description of how a payment gateway works.

Gateway Security

An electronic payment gateway like Transaction Express™ from Merchant Express® processes credit card transactions through an Internet connection much more quickly than systems that rely on a phoneline. Payment gateways are also very secure because they use SSL (Secure Socket Layer) encryption technology to protect sensitive cardholder and credit card data.

The Process

The payment gateway process begins when a customer makes a purchase, which can be either card present (face-to-face) or card not present (CNP), such as on a website or by MOTO (mail order/telephone order). Once their card is swiped through a cardreader or the required information is entered on a website’s payment page, the data is sent along to the payment gateway.

From there, the data is sent by the gateway provider to the issuing bank for authorization. If the bank determines that the cardholder has sufficient funds to cover the transaction, it sends an authorization code back to the merchant through the payment gateway and puts a hold equivalent to the transaction total on the cardholder’s funds; if there are insufficient funds in the account, the transaction is declined by the bank and the sale is terminated.

The entire process takes just seconds, and the merchant issues a receipt along with the merchandise to the customer to complete the sale.

Batch Processing

At the end of each business day, the merchant gathers all the authorization codes and submits them as a batch to their credit card processor for settlement. The processor submits the codes to the respective banks, who release the funds to the processor who, in turn, deposits them into the merchant’s bank account. Typically this takes two to three days.

Seamlessly Processes All Major Cards

One of the major benefits of using Transaction Express as your payment gateway is that it seamlessly processes all major credit cards and signature debit cards in real time wherever you have access to an Internet connection, giving you the mobility and freedom to pursue sales wherever they take you.

Lower Your Fees

And, by attaching a card swipe device to the USB port of your computer or mobile device, you’ll be charged lower, card-present processing fees. Other features that are popular with our payment gateway clients are the recurring payments option, customizable reporting function and the ability to manage merchant and customer emails.

Get Started Today

If you’re ready to take your credit card processing to the next level, Transaction Express may be the solution you’re seeking. Talk to a Merchant Express representative today about its applications for your business. A complete payment processing center — online, anytime — gives you the flexibility and reliability needed to grow your business.