Pay­ment Gate­ways Ex­plained

Inovio is the in­dus­try’s most in­tel­li­gent pay­ment gate­way – de­liv­er­ing seam­less in­te­gra­tion and global scal­a­bil­ity to busi­ness part­ners of all types and sizes. Since its in­cep­tion, Inovio has op­er­ated on the lead­ing edge of pay­ment tech­nol­ogy. How? By for

ISO & Agent - - PAYMENT GATEWAY | VISIONARIES AND Q&A - By Conal Cun­ning­ham, Gen­eral Man­ager, Inovio Pay­ments

What is a pay­ment gate­way?

A pay­ment gate­way is an e-com­merce en­tity that al­lows mer­chants to eas­ily and seam­lessly con­nect with their card­hold­ers, as well as with a mul­ti­tude of MSPS (mer­chant ser­vice providers). Be­yond sim­ply en­abling pay­ment pro­cess­ing, pay­ment gate­ways also serve to of­fer mer­chants a whole host of val­ueadded ser­vices in­clud­ing: con­nec­tions to store­front POS soft­ware, de­tailed cus­tomer re­port­ing, anti-fraud ser­vices, so­lu­tions for charge­back man­age­ment, and more.

How does a pay­ment gate­way work?

A pay­ment gate­way serves as a cen­tral­ized en­tity that bridges the mul­ti­tude of con­nec­tions nec­es­sary to com­plete a trans­ac­tion. This in­cludes con­nec­tions be­tween the card­holder, the mer­chant, pay­ment pro­ces­sors, and the card as­so­ci­a­tions. Here’s how it works: a cus­tomer places an or­der, ei­ther di­rectly on the gate­way or via the mer­chant’s web­site or store­front. The gate­way en­crypts the card, runs busi­ness rules, and sends a com­plex autho­riza­tion re­quest to the pay­ment pro­ces­sor. Next, the pro­ces­sor con­nects the mer­chant’s bank to the card­holder’s bank to get an autho­riza­tion. The pro­ces­sor then for­wards the autho­riza­tion de­tails back to the gate­way, which runs more busi­ness rules, and in­forms the mer­chant and cus­tomer that the sale is com­pleted.

Why use a pay­ment gate­way?

One of the main ad­van­tages of pay­ment gate­ways is how con­ve­nient they are – they’re able to trans­form com­plex tech­no­log­i­cal pro­cesses into sim­ple in­ter­faces that are easy to use for both mer­chants and their cus­tomers. In ad­di­tion to con­ve­nience, there are many other rea­sons for mer­chants to uti­lize pay­ment gate­ways, in­clud­ing: cost (mer­chants don’t have to spend ad­di­tional dol­lars to up­date net­works and soft­ware), speed (quick trans­ac­tions help goods/ser­vices go from store­front to cus­tomer quickly), and op­por­tu­nity (mer­chants can start sell­ing on the same day they get their mer­chant ac­count). Part­ner­ing with a pay­ment gate­way is also a cost-ef­fec­tive way for mer­chants to main­tain vi­tal data for back of­fice needs such as ful­fill­ment, billing, ac­count­ing, and more.

How are trans­ac­tions kept se­cure?

Pay­ment gate­ways are re­quired to re­main PCI Level 1 com­pli­ant at all times. As part of that com­pli­ance process, pay­ment gate­ways are sub­ject to ex­tremely strin­gent, in-depth au­dits. Fur­ther­more, any and all sen­si­tive card­holder data pass­ing through a pay­ment gate­way un­der­goes an en­cryp­tion process that keeps that data safe and se­cure from the point of sale (when the cus­tomer en­ters their card in­for­ma­tion) through to the mer­chant’s MSP and the ma­jor card brand net­works, and back again.

What should a com­pany look for in choos­ing a pay­ment gate­way?

Mer­chants can’t sell goods/ser­vices if their gate­way is down. So for starters, they should look for a pay­ment gate­way that of­fers max­i­mum reli­a­bil­ity – for in­stance with a net­work up­time of 99.99% or more. Us­abil­ity is also im­por­tant – in other words, mer­chants should make sure that the gate­way of­fers ser­vices and so­lu­tions suited to their spe­cific needs (ecom­merce, restau­rant, etc.). It’s also es­sen­tial that a gate­way of­fers mer­chants the se­cu­rity of fully PCI com­pli­ant trans­ac­tions. An easy-to-use in­ter­face (for ac­cess to re­ports and so forth) is also im­por­tant. Other things to con­sider are whether the gate­way has con­nec­tions to any spe­cific shop­ping cart soft­ware mer­chants may be in­ter­ested in and any banks they may do busi­ness with.

What mer­chant ac­count fea­tures are of­fered?

There are a whole host of fea­tures a pay­ment gate­way can and should be de­liv­er­ing to the mer­chants it part­ners with. These in­clude: ro­bust shop­ping cart func­tion­al­ity, POS so­lu­tions and ser­vices, in-depth re­port­ing tools, con­nec­tions to charge­back tools, and more. That be­ing said, many pay­ment gate­ways are owned by mer­chant ser­vice providers who may limit the ac­count fea­tures those gate­ways can of­fer mer­chants. There­fore it be­hooves a mer­chant to part­ner with a pay­ment gate­way that is mer­chant ser­vice provider/psp/iso ag­nos­tic so that the lim­i­ta­tion of mer­chant ac­count fea­tures is not a con­cern.

Does an ef­fec­tive mer­chant ac­count pay­ment gate­way al­low a busi­ness to quickly con­fig­ure au­to­matic billing and other value-added ser­vices?

With­out ques­tion. Whether it’s au­to­matic billing, sub­scrip­tion pro­cess­ing with re­cy­cling, au­to­matic ac­count up­daters, up­sales, an­tifraud mea­sures, or charge­back man­age­ment ser­vices, any le­git­i­mate mer­chant ac­count pay­ment gate­way should be 100% fo­cused on pro­vid­ing mer­chants with all the tools they need for busi­ness suc­cess. This in­cludes al­low­ing for seam­less con­nec­tiv­ity with any and all third-party en­ti­ties as well as al­low­ing a mer­chant’s cus­tomers to pay in any cur­rency. It’s all about al­low­ing a mer­chant to quickly and eas­ily per­form trans­ac­tions in a way that best suits their par­tic­u­lar busi­ness.

Does a pay­ment gate­way sup­port a pay­ment pro­ces­sor and shop­ping cart?

Yes. A rep­utable, re­li­able pay­ment gate­way should sup­port as many dif­fer­ent pay­ment pro­ces­sors, shop­ping carts, CRM (con­sumer re­source man­age­ment) sys­tems, and ERP (en­ter­prise re­source plan­ning) soft­ware so­lu­tions as pos­si­ble. Again, it’s all about pro­vid­ing flex­i­ble, cus­tom­ized so­lu­tions for mer­chants that al­low them to most eas­ily and ef­fec­tively grow their busi­nesses.

How does a pay­ment gate­way help a busi­ness main­tain PCI com­pli­ance?

A pay­ment gate­way al­lows a busi­ness to main­tain PCI com­pli­ance by shift­ing the bur­den of com­pli­ance from the mer­chant to the gate­way it­self. This is com­monly re­ferred to as PCI de­scop­ing. In other words, pay­ment gate­ways as­sume a mer­chant’s bur­den for PCI com­pli­ance. It’s the pay­ment gate­way that hosts the card data en­try form on a web­site. There­fore, it is the pay­ment gate­way who is re­spon­si­ble for (and ex­pert in) en­crypt­ing and to­k­eniz­ing the card­holder data on that web­site in a PCI com­pli­ant way.

How quickly do mer­chants get paid?

It is typ­i­cally a busi­ness owner’s mer­chant ser­vices provider who dic­tates when they will re­ceive the funds for their trans­ac­tions. How­ever, as cash flow is king when it comes to run­ning a busi­ness, one of a pay­ment gate­way’s most im­por­tant func­tions is to keep the trans­ac­tion process flow­ing prop­erly so that mer­chants can be paid promptly. Pay­ment gate­ways also have a re­spon­si­bil­ity to keep mer­chants in­formed as to when and how they will be paid. This should be achieved via de­tailed yet easy-toac­cess re­ports re­lated to trans­ac­tion batch times and so forth.

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