Payment gateways are electronic commerce interfaces which provide a way to transmit information between customers, merchants, and their banks. Payment gateways are used by companies which do business online to process credit card payments, and they may also be equipped to handle payments submitted by phone. A number of companies offer such services, for fees which can vary, depending on company policies and the types of services they offer.
Essentially, a payment gateway acts like the credit card terminal seen in retail stores. When a customer submits credit card information, the information is encrypted and sent through the payment gateway. The interface sends the information to the customer's bank, confirming that the card is valid and that there are enough available funds or credit to process the payment, and sends back an approval. This information is stored, allowing the merchant to submit a batch at the end of the day to his or her bank which includes a listing of all of the transactions which occurred, allowing the bank to collect the funds.
Payment gateways provide the opportunity for merchants to process credit cards safely and securely. The gateway gives customers flexibility and protects their information, and it also protects the merchant, by catching stolen cards, closed cards, or cards which do not have adequate funds or credit available for the transaction. Many customers like to use credit cards for convenience and protection, because if a merchant fails to fulfill an order, the customer can open a dispute through the credit card company and recover the funds or resolve the issue. By contrast, if someone pays by check or money order, he or she has no protections if the merchant behaves negligently or fraudulently.
When shopping for payment gateways, merchants usually want to find a gateway which offers fraud protection, compatibility with the merchant's electronic shopping cart and bank, and support in case a problem emerges. The company which produces the shopping cart used may have recommendations, and a bank may also have recommendations. People can also purchase packages which include a payment gateway, shopping cart, and merchant account as a complete bundle.
Numerous reviews of payment gateways can be found online at sites which cater to Internet retailers. These reviews include up to date discussions on the backbones of such systems, the features they offer, and their pricing. A typical review also details compatibility, allowing people to search for gateways which will integrate with their existing systems.