A Payment Gateway is a secure portal between a merchant and the various credit card associations such as VISA, MasterCard or American Express. The association behind a payment gateway provides the necessary services that help process credit cards securely over the Internet.
Payment gateways work by encrypting data from customers' credit cards before sending it to the company that wishes to accept online payments, this increases the security of the transaction by protecting sensitive information like credit card numbers.
A company wishing to sell an item or service online may either build its own payment system or use a third party payment network with which it has signed up for. The former requires greater technical expertise and is thus not so popular among small - medium sized companies.
To use a payment gateway, one must sign up with the respective company that provides its services. A verification routine is then initiated which checks if the merchant is who they say they are or not which includes checking if their business is legal in the country where it functions.
After this, authorization forms are filled for which an e-mail is received which provides an access code. This access code along with the company's username and password are then logged into the website of that payment gateway where further information is filled about the business owner, terms regarding the transaction are accepted before finally completing the form.
After this has been completed, a final verification step takes place which checks if all the information provided is correct and if the merchant has not been blacklisted. If this final step passes, the sale is finalized and the merchant receives a confirmation e-mail.
What is a Merchant Identification Number (MID) and how does it work?The Merchant Identification Number or MID is a unique customer identification number that identifies online and offline merchants and is often referred to as a Bank Identification Number (BIN). It helps distinguish between different types of payments such as the debit card, credit card or stored value cards. The International standard system uses 16 digit numbers that are assigned by payment associations like VISA or MasterCard.
The first six digits on a VISA MID represents the Issuer Identification Number (IIN) which is assigned by Visa U.S.A and the next nine digits are the Institution Identification Number (IIN) which is assigned by the acquiring bank or financial institution which processes payment requests for an online merchant.
So, if your VISA MID starts with "4" then it denotes that you are a member of the financial organization that issues VISA cards, this is then followed by your bank account number which makes up the next seven digits. The ninth digit on your MID represents the first digit of your BIN and it refers to the department within your company that handles payments and is usually an identification number for you as a merchant.
What is a Transaction ID and how does it work?A transaction ID is a unique number provided by the payment gateway to identify every transaction made. If any problems arise, this number can be used to look up details about the transaction such as when it was initiated, where it originated from and what kind of transaction was made. It also helps merchants determine where they are supposed to get the funds deposited into their account.
What is a Payment Gateway? And how does it work?A payment gateway is an electronic system that authorizes credit card or debit card payments on your website. They are responsible for encrypting sensitive information like credit card numbers before processing them, also they allow you to accept various payment methods such as credit cards, echecks or online cheques.
