A Payment Gateway Service Provider is the entity or group that provides online businesses the figurative gateway or throughway for sales transaction information to pass from a merchant’s online sales hub to the credit cardprocessing company. Once that information is processed, it is returned to a merchants’ shopping card online sales hub again, in order to close the sale part of the transaction before final payment is made once a “batch” of sales is submitted by the merchant at the end of a day or session to the credit card company.
The Payment Gateway itself is service provided by an e-commerce application service provider that authorizes all payments for electronic merchants, internet retailers, those companies that use both physical retail spaces and online sales, or traditional brick and mortar retail centers. The payment gateway is essentially like an in-storephysical POS – or point of sale – terminal located in most retail businesses all over the world. Payment gateways encrypt very special information likecredit card numbers and personal identification, to ensure that such information is transferred with the utmost security between the customer credit cardholder and the merchant conducting business.
The credit cardprocessing company is a company that verifies all of the credit card data andmakes sure the charge is valid and indeed not fraudulent. The credit cardprocessing company has an electronic data center that processes this crucialinformation within a matter of seconds. Once the charge is valid, the processorwill settle all of the funds in a merchant account so the merchant can receive payment for a sales order. The fundswill finally be transferred into a merchant business bank account so themerchant can have access to them, usually within a few business days. Ofcourse, this process does not require what is known as a point of sale – or POSmachine – commonly used in physical, in-person sales scenarios.