When you start doing research into launching an ecommerce store, one important term that will definitely appear on your radar is payment gateway. While often overlooked by merchants setting up their first online store, it’s an extremely important component that enables online shoppers to pay you on your website. So without a payment gateway, your online store would literally just be a catalogue of products lacking the ability to receive payments. Which isn’t particularly useful to your business or your customers.
What is a payment gateway?
At its core, a payment gateway is the technology that enables merchants to accept payments from their customers. This is accomplished by acting as the link between your website and the payment provider or customer through which the secure payment data flows through. This includes point-of-sale terminals such as card machines and QR codes that can be scanned via smartphone apps like Masterpass, Zapper and SnapScan in physical brick-and-mortar stores, as well as payment processing portals that receive and process payments made online, such as on ecommerce marketplaces and online stores.
The infographic below demonstrates the role of a traditional payment gateway in an ecommerce scenario.
Around the world there are a few recognisable payment service providers that act as a payment gateway for their merchants. In South Africa, PayFast is a popular online payment solution that processes payments on behalf of more than 80,000 merchants.
How does a payment gateway work?
Although the term payment gateway specifically refers to the technology that sends the payment data to the merchant acquiring bank, it’s generally used as an overarching term that includes payment solution, payment platform, payment aggregator and payment facilitator.
The process of how a payment gateway works, specifically a payment aggregator as in the case of PayFast, can be simplified to the following steps:
An online shopper adds an item to their shopping cart on your website.
When they are ready to complete the purchase, they go to the checkout page where they add all their delivery details and select to make a payment.
Customers are redirected to the secure PayFast payment engine where they can select their preferred payment method and follow the steps.
PayFast processes the payment and notifies your ecommerce platform once the payment has been completed successfully so you can deliver the product to your customer.
The payment is deposited into your PayFast account, from where you can request a payout into the bank account that’s linked to your PayFast account.
Some of the benefits of choosing a payment gateway like PayFast is that you can sign up
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