In order to learn what an internet payment gateway is, and how it works, you must first understand how a credit card machine works. At retail (face to face) business locations a customer will hand their credit card to the cashier for payment. The first thing the cashier does is enter the dollar amount of the sale, and then they will take the credit card and swipe it through a credit card machine. The machine then transmits the data from the credit card to the “processing network”. The processing network returns either a “declined” or “approved” response. If approved, the transaction will get batched out by the terminal at the end of the day with the rest of the day’s transactions. Typically a couple days later the money from that sale is deposited into the business owner’s bank account.
This process works a bit differently if you don’t see your customers face to face. If you have a website selling products or services, you obviously still need the ability to accept credit card payments as well. Since your customers will typically be ordering from their homes (or work), it is not possible to swipe their card. This is where an internet payment gateway comes into the picture.
An internet payment gateway is basically a “credit card machine” for your website. There are usually four key pieces that are needed for a business to accept orders online (website, shopping cart, internet payment gateway, internet merchant account). First you need a website with products or services for sale… that is pretty obvious. Next you need an online shopping cart. This cart basically adds up all the items you would like to buy and then formats the order so that it is ready for the next piece of the puzzle.
The internet payment gateway comes into play next. It collects the information from the cart, such as the $$ amount, customer information, billing address, etc, etc. The internet payment gateway then acts like a “credit card machine”. It sends encrypted data back and forth over the internet. It is communicating with the processing networks, seeking authorization on the customer’s credit card. The internet gateway needs to have an internet merchant account MID programmed into it in order communicate with the processing network. Once the transaction has been completed (usually in 2-5 seconds), it will pass either an “Approved”, or “Declined” response back to the shopping cart and then lets the customer know that their transaction is complete.
As you can see an Ecommerce business owner needs a lot more than just a website. The shopping cart, internet payment gateway, and internet merchant account play necessary, key roles in turning a website into an “ecommerce enabled” website. TakeCardsToday.com offers both internet merchant accounts and the payment gateway to go with them. In fact, one of our internet payment gateways, DowCommerce even includes an ecommerce shopping cart at no additional cost.