Merchant account gateway – What is it?

In the modern era where e-commerce is such a valuable part of your business, it is necessary to have access to a wide variety of options for your business needs. One of these is the merchant account gateway, which is a type of e-commerce service which authorizes payments for online retailers and traditional brick-and-mortar locations. In many ways it is exactly like a physical point-of-sale terminal located in most retail outlets where credit cards are swiped, but the payment gateway protects credit card details by encrypting sensitive information such as the numbers associated with each card, to ensure that the information is passed securely from the customer to the merchant, from the merchant to the payment processor, and finally onto the bank.

The system itself is fairly complex, but the beauty is that you don’t have to worry about of the day to day details. A merchant account gateway facilitates the transfer of information between whichever payment portal you have set up for your customers, and the actual front-end processor or acquiring bank who is dealing with the financial backing. Once a customer has ordered a product or purchased a service through a merchant account gateway, that gateway performs a variety of tasks to actually process the individual transactions.

When a customer has placed an order, perhaps by submitting their card details into an automatic phone answering service or pressing a submit order button on a website, the information is then encrypted and sent to the merchant’s web server through SSL encryption, otherwise known as Secure Socket Layer. The information is then forwarded to the payment gateway, which is yet another encrypted connection connected to the payment server and hosted by the actual gateway business. The transaction information is then forwarded to the acquiring bank you have chosen for your business, and yet again transferred to the card association of the customer, such as Visa or MasterCard. At that point, the issuing bank either approves or declines the payment through the payment gateway, and if it is approved the card association routes the transaction back to the correct card issuing bank. All of this information generally takes between two and 3 seconds, given the versatility of Internet connections and the streamlined systems set in place for merchant accounts.

Once all this has taken place, you can submit any approved transactions in a batch to the acquiring bank for settlement, at which point your bank will deposit the total of approved funds in your nominated account, which is determined by your merchant account provider. The entire process from authorization to the final settlement of funding typically takes around three days for most businesses.

On top of this, most merchant account gateways also provide a variety of tools that allow you to automatically screen orders for fraud as well as calculate tax in real-time, prior to the actual authorization request being sent. These features can include geolocation detectors, delivery address for education systems, and even computer fingerprinting technology.

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