- Transactions or online payments made by online customers/cardholders.
- Profit or revenue earned by merchants/website owners after transactions made by online users through their websites.
What is a payment gateway?
A payment gateway can be termed as an intermediary or a platform that enables e-commerce merchants to receive payments from their online customers, payment gateway authenticates the transaction and routes the transaction to the bank and ensures that the merchants receive the funds/payment. The payment gateway will create and provide merchants with a merchant account, after which the merchant can begin processing through their website.
What is a Merchant Account?
There is a difference between a merchant bank account and a merchant account. A merchant account is a portal for online business services or a platform through which merchants will be able to connect their website to a payment gateway, and the payment gateway is in turn integrated with the receiving banks.
Payment Gateway Settlement Steps:
This process performs the following steps:
- The cardholder enters the card details or bank details on the checkout page of the website/merchant.
- After the merchant is verified, the money will be transferred to the company and the customer will receive a confirmation notification.
If the customer does not have sufficient amounts for the rental of services or the card information has been incorrectly provided, the online payment will be automatically rejected. However, they will receive a service denial notification.
- Once the purchase is approved, the funds are moved from the cardholder's credit or debit card and routed through the payment gateway to the accepting bank.
- The Receiving Bank then communicates with the card networks (Visa, MasterCard, Amex, JCB or others) and the Issuing Bank to complete the transaction.
- Once this process is complete, the Payment Gateway will receive the settled funds into their bank account and can now proceed to generate the merchant statement and settle the funds.