UNDERSTANDING CREDIT CARD GATEWAYS AND PLATFORMS
WHAT IS A CREDIT CARD GATEWAY?
When a merchant processes a credit card transaction multiple processes take place. To fully understand what a gateway is we need to look at all of these processes.
In a retail card-present transaction these are the steps:
The card is swiped through a credit card terminal or Point of Sale application (POS).
The terminal or POS then accesses a gateway, typically through the internet, and sends information to a processing platform.
The processing platform then determines what bank issued the card to the cardholder and sends a request for authorization to that bank's system.
The card-issuing bank then sends the authorization or decline back to the processing platform.
The processing platform sends the information back to the gateway.
The gateway sends the information back to the terminal or the POS system to process the sale.
I know that was probably boring to read but necessary to help understand the most basic function of a gateway.
Gateways, however, have many other functions. In the event of an online web store transaction, the gateway connects the web store to the credit card processing platform. When using a gateway in this environment, the gateway can serve many tasks, including keeping the web store PCI compliant and secure for cardholders to enter their card information. The gateway can also provide robust reporting options for the merchant.
Some of the features that can be obtained from gateways include:
The ability to Surcharge transactions
Customer Database that stores encrypted card data and other billing data
Automatic Recurring Billing
Electronic Processing of Checks
Donations for Non-Profits
Setting Limits on Purchase Amounts
Extremely Robust and Detailed Reporting features
Many other Fraud and Customer Management features
Gateways have become a vital part of the credit card landscape. Many of the customized, industry-specific software products for running businesses, have a gateway running in the background. These gateways make the software seamless in running credit card, debit card, check and even cash transactions. This gateway feature makes processing these transactions more efficient and cost-effective for merchants.
Every gateway out there must be connected to a processing platform that it has been certified on. Not all gateways will work on every processing platform. So, let's talk a bit about processing platforms.
Processing Platforms play a significant role in the landscape as well. These huge corporations include First Data (FiServ), Worldpay (FIS), TSYS, Buypass and many others. To simplify what a processing platform is, you can picture it as a giant switch that receives transaction data and hands it off to many other pieces of the puzzle that authorize and fund payment for credit card transactions. These platforms process millions of transactions per day. Not only are they involved in the acceptance of credit cards by merchants, but they are also critical in paying the merchants for their transactions.
MERGING A PLATFORM WITH THE RIGHT GATEWAY
Depending on the features you are looking for to meet your payment processing needs, it is important to merge the correct gateway with the appropriate processing platform. A retail merchant using a POS System needs a much different gateway solution than an ecommerce merchant where customers are inputting their cards online. Some merchants need much more robust reporting options than others. Non-profits need the gateway to handle donations differently than it does for items for sale. It is important that your provider has relationships with multiple gateways and processing platforms, in order to truly meet your specific needs. So, as you can see, it definitely pays to have the right Merchant Services Consultant to help you get the right solution for your specific business needs.