Payment Gateways

Payment Gateways

Payment gateways enable online merchants to accept payments by  credit-card (and sometimes other payment methods)  from their customers.

When the customer enters their card details into the merchants payment page, and hits the pay now button, the gateway sends the card details to the merchants bank for processing. The merchants bank, in turn, submits the details to the credit-card company for authorisation, and to the card issuers bank (i.e. the card holders bank) for payment.

There are many different types of payment gateway services including those that support voice and phone transactions as well as online transactions. But from the point of view of online merchants, they fall into two basic groups – hosted or in-house.

Often, with larger merchants, the gateway is maintained in-house, and is fully integrated with the online shop. But many smaller businesses use independent gateway services, using a payment page hosted at either the bank itself, or at the gateway service.

Hosted payment pages are much quicker and easier to set-up, and relieve the merchant of any responsibility for storing customer credit-card details.

That is important from a security standpoint as any business that captures or stores credit-card numbers is required to comply with the Payment Card Industry Data Security Standards (PCI-DSS).

But hosted pages lack the flexibility of payment pages hosted in-house, and may not have features such as in-built support for manual or remote processing of transactions. In Australia, the ANZ is perhaps the best-known bank provider of a payment gateway, with its eGate service.

Some payment gateway services operate internationally, signing-up merchants in any country, such as Authorize.Net. Others, such as Securepay or eWay, are mainly locally focussed on the  Australian market.

Payment gateways are a confusing topic because there are a number of online payment services that are not payment gateways, linking merchants and their customers with a bank. Rather, these peer-to-peer payment services offer a middleman service, which transfers funds and payments between members of the service.

PayPal is perhaps the best known of these, but others include Australia’s Paymate and Poli, Moneybookers and AlertPay.

Of course, a payment gateway isn’t the only way an online merchant can get paid online. Many businesses nowadays publish their bank BSB and account numbers on their invoices so that customers can key in those details to the Pay Anyone facility within their Internet banking service.

Billing services such as those operated by BPay or Australia Post also offer both online and offline merchants with a way to get paid that need not involve any paper handling at all.

For a more comprehensive explanation check out Wikipedia’s entry.

There are a wide variety of payment gateways available in the Australasian marketplace.

To find local payment gateway vendors, including contact details, check out the relevant section of our Australian eCommerce Directory.