Payment Gateway API
A payment gateway is a technology used by merchants to accept debit or credit card purchases from customers. The term includes not only the physical card-reading devices found in brick-and-mortar retail stores but also the payment processing portals found in online stores.

Payment Gateway API - the basics: What they are and the role they play in payment processing

A payment gateway is a merchant service provided by an application service provider that authorizes credit card or direct payment processing for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. The payment gateway may be provided by a bank to its customers, but can be provided by a specialised financial service provider as a separate service, such as a payment service provider.
A payment gateway facilitates a payment transaction by the transfer of information between a payment portal (such as a website, mobile phone or interactive voice response service) and the front end processor or acquiring bank.
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Encryption

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Connection with payment processor

The payment gateway connects a business's customer-facing checkout and the payment processing provider.

Authorisation

The payment gateway forwards the encrypted transaction data to the business's acquiring bank, which then sends the information to the customer's issuing bank or the relevant payment processor. The issuing bank or payment processor verifies the transaction details, including the customer's account balance and the validity of the payment method, before approving or declining the transaction. The payment gateway receives the response and sends it back to the business.

Data collection and reporting

Payment gateways often provide businesses with valuable data that can help them analyse and manage their transactions. This may include transaction history, refund management and other data points to help businesses identify trends and improve their payment operations.

Fraud detection and prevention

To minimise the risk of fraudulent transactions, payment gateways use advanced security measures, such as fraud-detection algorithms, address verification systems (AVS) and card verification value (CVV) checks. These measures help identify and block potentially fraudulent transactions before they can be processed.

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