Introduction: - In earlier days of shopping we purchase clothes, books
or other goods. The shopkeepers in small shops take cash for the goods sold. In
turn they may give us a cash memo. In bigger shops situated in shopping malls
or branded stores, there is a Point of Sale (POS) terminal. This has a small
sensor which scans the bar code on the goods and the product is automatically
registered along with its price on the computer. The print out is then given to
the buyer who pays by cash or by credit/debit card. In e-business payments have
to be made online. There is no physical exchange of cash across a counter.
Payments
have to be made through the web. This is done by an e-commerce application
service provider called as "Payment
Gateway"
A payment gateway authorizes payments
made online for anyone who is trading, buying or selling. These may include retailers,
manufacturers, dealers and buyers and sellers of goods on the internet. It is
the virtual (base) equivalent (equal) of a physical point of sale. Payments are
made through debit cards, credit cards and by direct transfers from bank
accounts through the net banking facility. Most gateways offer all these
options for payments.
Working
of a Payment gateway:
Any customer who uses the payment gateway goes
through the following steps:
1.
He/she places an
order for the goods to be bought and clicks on a button called 'SUBMIT' once
the merchandise is chosen.
2.
The site then
asks for the customer's credit card details. Once the details are entered, the
browser codes the information.
3.
The transaction
details are forwards by the e-business website to the payment gateway. At this
stage again information is coded.
4.
The payment
gateway forwarded the information to the payment processor which is used by the
credit card issuing bank.
5.
The payment
processor sends the information to the card association (VISA / MASTER / AMEX)
6.
The card
association forwards the transaction to the card issuing bank.
7.
The card issuing
bank authorizes the payment. Then it sends its request back through the same
process to the merchant website. Once the authorization is received, the sale is
approved.
8.
The entire
process does not take more than 2-3 minutes depending on the speed of the
internet connection.
9.
If the internet
connection fails at a step of the process, then the appropriate procedure is
adopted. E.g. if the connection fails after payment has been made but before
the order is finalized, then the payment is credited back to the card account
with a stipulated (specific) time.
The flow chart given below
indicates the steps in the process of a secure transaction.
Website -------------> Payment
Gateway-------------> Payment Processor -----------> Card Association --------> Card Issuing Bank
