7 Features & Functions of Payment Gateways

Payment gateways are online platforms or services that facilitate the secure and efficient transfer of funds between buyers and sellers during online transactions. They act as intermediaries, processing payment information and authorizing transactions between customers, merchants, and financial institutions. Payment gateways enable businesses to accept electronic payments, such as credit cards, debit cards, and digital wallets, for goods and services. To see the up-to-date list of 50+ payment gateways that ChargeOver supports, click ChargeOver Payment Gateways

Here are the key features and functions of payment gateways:

1. Transaction Security: Data and personal information need to be kept secure during transactions. Payment gateways employ various security measures, including encryption and tokenization, to protect sensitive customer payment information during transmission. This helps prevent unauthorized access and reduce the risk of data breaches. It is important to customers that they don’t need to worry about their important and sensitive information being stolen or misused.
2. Payment Processing: This is the heavy lifting that is done behind the scenes, but takes only moments. When a customer makes a purchase online, the payment gateway securely captures and transfers the payment details, such as credit card information, to the relevant financial institution for authorization. It facilitates communication between the merchant, customer, and financial institution involved in the transaction. Imagine trying to do that manually!
3. Authorization and Verification: Payment gateways verify the validity of the customer's payment information, including the availability of funds and card authentication. This step ensures that the customer has sufficient funds and the transaction is legitimate. Not only verification of authenticity but confirming that the information is up-to-date and not expired.
4. Currency Conversion: Be sure your payment gateway can handle the types of currencies that your customers will be using. Many payment gateways support currency conversion, allowing businesses to accept payments in different currencies. This is especially beneficial for businesses operating in global markets, enabling them to provide localized payment options to customers. Click see our list of payment gateways and which payment gateways are for specific countries.
5. Settlement and Payouts: Once a payment is authorized, the payment gateway facilitates the settlement process, transferring the funds from the customer's account to the merchant's account. Depending on the payment gateway and merchant preferences, settlements can occur in real time or within a predefined settlement period. Merchants can then withdraw the funds from their account as payouts.
6. Recurring Billing: Some payment gateways offer features for businesses with subscription-based models or recurring payments. These features automate the billing process, allowing businesses to set up recurring payment schedules and automatically charge customers at predefined intervals. Check out the 50+ payment gateways that work with ChargeOver’s recurring billing and invoices software.

Some examples of payment gateways include PayPal, Stripe, Square, Authorize.Net, and Braintree. Gateways may have their own set of features, pricing structures, country specifics, and supported payment methods. A business should consider factors such as transaction fees, security measures, integration options, and customer support when selecting a payment gateway.

Overall, payment gateways play a crucial role in facilitating secure online transactions, enabling businesses to accept electronic payments and providing a seamless customer experience.