Payment Gateway Integration: A General Guide That You Must Read

Hardik Thakker

Founder & CEO

Published On: Apr 13, 2023

If you’re an eCommerce business owner or developer looking to enhance your online store payment processing capabilities, you’re in the right place.

In today’s digital world, a seamless and secure payment gateway integration is essential for the success of any online business. In this blog, we will explore the ins and outs of payment gateway integration, focusing on the benefits, challenges, and best practices to ensure a smooth and secure payment processing experience for your customers.

Whether you’re a small business owner just starting out or an established enterprise looking to optimize your payment processes, you’ll get valuable insights and practical tips to help you navigate the complex world of payment gateway integration.

So, let’s dive in and unlock the power of seamless payment processing for your eCommerce store!

Key Takeaways

What is Payment Gateway?

A payment gateway is a technology used to securely process transactions between a customer and a merchant during an online purchase. It is essentially the link between the merchant’s website or application and the financial institute that processes the payment.

When a customer makes a purchase on a website, the payment gateway encrypts the sensitive financial data, such as credit card details, and sends it to the financial institutes for processing. The payment gateway then receives the result of the transaction and relays it back to the merchant and the customer, indicating whether the payment was successful or declined.

Payment gateways help ensure that online transactions are secure, efficient, and reliable. They typically charge a fee for their payment gateway services, which can be a percentage of the transaction amount or a flat fee per transaction.

What are the Different Types of Online Payment Gateways?

There are several types of online payment gateways available that businesses can choose from depending on their requirements. Here are some of the
most popular ones:

1. Hosted Payment Gateways

   These are third-party payment gateways that redirect customers to a secure payment page hosted by the payment gateway provider.

   A hosted payment gateway is a type of payment gateway that redirects customers to a payment page hosted by a third-party payment gateway processor during the checkout process. This payment page is typically branded to match the merchant account website, but is actually hosted on the processor’s server.

   Let’s see how hosted payment gateway actually works?

   

   When a customer is ready to pay for their purchase, they are redirected to the payment page where they are asked to enter their payment information. This information is then securely transmitted to the payment processor for authorization request and processing.

   Hosted payment gateway are popular among merchants who want to offer a streamlined checkout process without having to worry about the technical details of payment processing flow. The payment gateway providers also offer increased security since the payment data is transmitted directly to the payment processor and not stored on the merchant’s server.

   Examples include: PayPal, Stripe, and 2Checkout.

2. Self-Hosted Custom Payment Gateway

   This online payment gateway require businesses to host the payment page on their own merchant account servers. They offer greater control over the checkout process, but require more technical expertise.

   Creating a self-hosted custom payment gateway can be a complex and challenging task. This custom gateway of payment processing involves developing a secure platform for processing payments, integrating with various financial institutions, and adhering to industry standards for security and PCI compliance.

   Here are some general steps to consider when creating a self-hosted custom payment gateway:

   • Determine the payment methods: Decide for an appropriate payment method from list of multiple payment methods your custom gateway will support, such as credit/debit cards, PayPal, bank transfers, or digital payments like wallets.
   • Develop the payment processing platform: Design and develop a secure payment processing platform that can accept payments from various sources and process them efficiently.
   • Create a merchant account: Allow merchants to create accounts and configure their payment gateway settings. This will require storing and retrieving sensitive information such as bank account details, credit card data, and transaction histories.
   • Integrate with financial institutions: Establish relationships with banks and other financial institutes that will process customer payments through your platform. This may require integrating with multiple payment processors or dealing with robust integrated payment gateways.
   • Ensure security and PCI DSS compliance: Implement robust security measures to protect sensitive data such as credit card numbers and comply with industry regulations such as PCI DSS compliance (Payment Card Industry Data Security Standard).
   • Test and launch: Thoroughly test the payment gateway in a staging environment before launching it to the public. Monitor the system for issues and make adjustments as needed.
   • Provide customer support: Offer customer support to merchants who use your online payment gateway. This may involve addressing technical issues, responding to inquiries, or resolving disputes.

   Keep in mind that creating a self-hosted custom payment gateway determines a significant undertaking that requires a high level of technical expertise and financial resources. It may be more practical for small businesses to use existing payment gateways that are already established and have a proven track record of security and reliability.

   Examples include: Authorize.Net and Braintree.

3. API or Non-Hosted Payment Gateways

   These gateways offer businesses the ability to integrate payment processing directly into their website or mobile app using an API. This allows for a seamless checkout experience.

   This is the most customizable and online payment gateway integration method, as it enables the merchant to control the payment experience on their website.

   With API integration, the customer enters payment data on the merchant’s website, and the payment is processed in the background of payment processing system. API integration requires technical expertise and development resources to implement.

   In the context of payment gateways, an API provides a way for merchants to integrate payment processing into their mobile or web application development services. The API defines a standard set of commands that can be used to authorize and process recurring payments, retrieve transaction data, and perform other related tasks.

   The working process of API payment gateway is fairly simple.

   1. When a customer makes a payment through an API payment gateway, the merchant’s website or application sends a request to the payment gateway API.
   2. The API then communicates with the payment providers to complete the payment transaction status.
   3. The payment gateway API returns a response to the merchant’s website or application indicating whether the payment was successful or not.

   API payment gateways offer several advantages over traditional payment processing methods. They are faster, more secure, and more flexible.

   Because the payment processing is handled off-site, merchants do not need to store sensitive payment information on their own servers, reducing their liability and improving security to the payment solution.

   Additionally, because APIs are designed to be flexible and customizable, merchants or any credit card company can easily integrate payment processing into their existing systems and workflows.

   Many popular payment gateways, such as Stripe, PayPal, and Braintree, offer API payment gateways for merchants to use. Merchants can choose the payment gateway that best suits their needs and integrate it using the API.

   Examples include: Square, Dwolla, and Adyen.

4. Mobile Payment Gateways

   These gateways are designed for mobile commerce and allow customers to pay using their mobile devices.

   Mobile payment gateways are digital payment systems that allow consumers to make payments through their mobile devices. They typically involve the use of mobile apps or websites, and allow users to securely and conveniently make recurring payments for goods and services from their mobile devices.

   Some popular mobile payment gateways include:

   • PayPal: This is one of the most popular mobile payment gateways, with millions of users worldwide. PayPal express checkout allows users to make payments, receive payments, and transfer funds between accounts.
   • Apple Pay: This is a mobile payment and digital wallet service developed by Apple Inc. It allows users to make payments from their Apple devices, such as iPhone, iPad, and Apple Watch.
   • Google Pay: This is a mobile payment and digital wallet service developed by Google. It allows users to make digital payments from their Android devices and supports digital payments, in-app purchases, and peer-to-peer transactions.
   • Samsung Pay: This is a mobile payment and digital wallet service developed by Samsung Electronics. It allows users to make payments from their Samsung devices, including payments, in-app purchases, and peer-to-peer transaction details.
   • Venmo: This is a mobile payment service that allows users to send and receive payments from their mobile devices. It is primarily used for peer-to-peer transactions, but can also be used for business transactions.
   • Square: This is a mobile payment system that allows businesses to accept money from customers through their mobile devices. It supports contactless payments, chip and PIN payments, and magstripe payments.

5. Redirect Integration Method

   In this integration method, when a customer is ready to checkout, they are redirected to the payment gateway’s secure payment page to complete the transaction flow.

   After the payment is processed, the customer is redirected back to the merchant accounts website. The merchant does not handle any sensitive payment data, making this method more secure. The disadvantage of this method is that it can disrupt the user experience.

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6. Direct Post Integration Method

   In this method, the customer enters payment information on the merchant’s website, and the payment data is directly sent to the payment gateway’s server or merchant’s web server for processing.

   This method is more seamless as it does not redirect the customer to another page. However, the merchant is responsible for handling and securing payment data.

   Direct Post Integration is a method of integrating a payment gateway into an e-commerce website or application. With this method, the payment gateway is integrated directly into the website or application, allowing the user to remain on the website during the payment process.

   The Direct Post Integration method involves the following steps:

   1. The user initiates a payment transaction on the e-commerce website or application.
   2. The website or application collects the necessary payment information, such as the user’s credit card details, billing information, and also charges transaction fees like setup fees.
   3. The website or application then securely sends the payment information to the payment gateway for processing.
   4. The payment gateway processes the payment and returns a response to the website or application, indicating whether the transaction was successful or not.
   5. The website or application then displays a confirmation message to the user, indicating the status of the transaction like transaction processed data.

   Direct Post Integration is a popular integration method for payment gateways because it allows for a seamless user experience, with the user remaining on the website during the payment process.

   It is also considered more secure than other integration methods because the payment information is transmitted directly to the payment gateway, without being stored on the website or application.

7. Direct API Integration Method

   This is similar to the API integration method, but instead of processing payments in the background, payment data is directly sent to the payment gateway’s server for processing. This method requires technical expertise and development resources to implement but provides a more seamless checkout experience.

   So, Payment gateway integration is essential for any e-commerce business, and choosing the right integration method is crucial. The best integration method depends on the merchant’s technical expertise, budget, and security requirements.

   The above-discussed methods are the most commonly used payment gateway integration methods, and merchants should carefully evaluate each method before selecting the most suitable one for their business needs.

Working of Payment Gateway

A payment gateway is a technology that enables online transactions by acting as an intermediary between an e-commerce website and a financial institution that processes the payment.

The payment gateway allows customers to securely and conveniently pay for goods and services online using various available and new payment methods, such as credit cards, debit cards, and e-wallets.

Here is a simplified overview of how a payment gateway works:

1. The customer initiates a payment by selecting their payment method and entering their payment details on the checkout page of the e-commerce website.
2. The payment gateway encrypts the payment data to protect it from unauthorized access and sends it securely to the payment processor. It is made possible by using SSL certificate.
3. The payment processor receives the payment sensitive data and verifies the customer’s payment details, such as the card number and expiry date.
4. The payment processor then contacts the customer’s bank to verify that the funds are available and reserves them for the transaction. And yes the verification process take some monthly fee.
5. The payment processor sends a response back to the payment gateway, indicating whether the payment was successful or not.
6. If the payment was successful, the payment gateway sends a confirmation to the e-commerce website and releases the payment to the merchant’s account.
7. If the payment was unsuccessful, the payment gateway sends an error message to the e-commerce website, and the customer is prompted to try again or choose another payment method.

Payment gateways help facilitate safe and secure online transactions, data protection practices for both the customer and the merchant from fraudulent activities.

What is Payment Gateway Integration?

Payment gateway integration refers to the process of connecting a payment gateway, a software application that facilitates the processing of online payments or electronic payments, to an e-commerce website or mobile application.

When a customer makes a purchase on an e-commerce site, the payment gateway securely captures the customer’s payment options, such as credit card details, and processes the transaction. The payment gateway then communicates with the merchant’s bank for acquiring bank details and the customer’s bank to transfer funds.

Integrated payment gateway process involves setting up the necessary software and infrastructure to allow the payment gateway to communicate with the e-commerce site or mobile application. This can involve using APIs (Application Programming Interfaces) or other software tools to connect the two systems and ensure that the payment process is seamless and secure.

The integration of a payment gateway is a critical component of any e-commerce website or mobile application, as it ensures that customers can easily and securely make online payments.

How To Integrate Payment Gateways To Your Web and Mobile Apps?

Integrating payment gateways to your web and mobile apps can be a complex process, but the following steps can help guide you through the process:

• Choose a payment gateway: There are many payment gateways available, each with different features and pricing models. Choose a payment gateway that meets your specific needs and budget.
• Obtain API credentials: Depending on the payment gateway, you may need to register for an account and obtain API credentials, such as an API key or secret. These credentials are necessary for connecting to the payment gateway’s API.
• Choose an integration method: Payment gateways offer different integration methods, such as Direct Post Integration, Direct API Integration, or Hosted Payment Pages. Choose an integration method that meets your requirements in terms of user experience, customization, and security.
• Develop the integration: Depending on the integration method you choose, you will need to develop code to integrate a payment gateway and handle the payment flow. This may involve building forms, creating API requests, and handling responses.
• Test the integration: Test the payment gateway integration thoroughly to ensure that it works as expected. This may involve testing various payment scenarios, such as successful payments, failed payments, and refunds.
• Deploy the integration: Once you have tested the payment gateway integration, deploy it to your production environment. Make sure that your website or mobile app is ready to accept money from users.
• Monitor and maintain the integration: Keep track of payment transactions and monitor the payment gateway for any issues or errors that you receive from payment service providers. Stay up-to-date with the payment gateway’s documentation and make any necessary updates to your integration over time.

It’s important to ensure that your payment gateway integration is secure, compliant with regulations, and provides a good user experience for your customers. Consider working with a payment gateway provider or a hire app developers with experience in payment gateway integrations to ensure that your integration meets these requirements.

Conclusion

Integrating a payment gateway into your business is a crucial step to enable secure, seamless, and efficient online transactions, providing your customers with a convenient and trustworthy payment experience while safeguarding your business from potential fraud and data breaches.

Choose a payment gateway that aligns with your business requirements, and follow best practices for integration to ensure a successful implementation and smooth operation of your online payment processing system.

With the right payment gateway integration, you can enhance customer satisfaction, streamline your payment processes, and drive business growth in today’s digital economy. So, don’t delay – take the necessary steps to integrate a payment gateway into your business and unlock the full potential of online payments with our payment gateway development services, Let’s Connect!