In this online world, not having an online payment system is like not having a phone. Money transactions are now carried out online and businesses have to adapt to the new ways of doing things. The new method of payment is the use of Payment Gateways or Payment Processors to accept payments on websites, mobile apps or desktop software. This article lists all the details you need to know about accepting payments on your website with a Payment Gateway. Let’s get started!
1. 3D Secure / 2 factor authentication
3D Secure authentication refers to the extra layer of security added in an online transaction. When paying online, an SMS with the OTP is received as a security measure. This is also known as Two-factor authentication. It is called two-factor authentication because the security measures include two steps. In the first step, the customer enters the card details, like cardholder name, card number, CVV, username, password, and then in the second step the OTP is received on the registered mobile number.
2. Acquiring Bank
This is the merchant bank in which the online payments are first received. The settlements are processed from the acquiring bank to the merchant’s account. The acquiring bank holds the account on behalf of the merchant to accept the payments made by the customers.
API Full form is Application Programming Interface. It enables the communication terms between the two applications. It is in the form of a connecting link between them.
To authenticate the identity of the person who has initiated the online payment, an authentication process is carried out. The details as mentioned in Term 1 are required to be entered by the payer.
The authorization request is sent via the payment gateway to the customer’s bank when an online payment is initiated. If the customer’s bank authorizes the transaction then the transaction is successful otherwise it will get failed. The failure may be due to the lack of balance or security reasons.
6. Bank Identification Number
This number is vital for various reasons in online payment. BIN is the initial 6 to 8 digits in the card number. It is useful for the identification of the transaction, its origin, also in authorization, processing, and clearing.
7. Business Days
A business day is also known as the Working day. The working days would not include the bank/public holidays, 2nd and 4th Saturdays of the month, and all Sundays. Mostly this term is used with regard to settlements. However, it is also applicable when the functioning of any payment gateway-related activity is done on a working day.
The authorized amount from the customer’s bank is transferred to the acquiring bank. The merchant needs to capture these finds which is a type of acknowledgment for receiving the amount. Capture can be manual or automatic.
When a customer raises a dispute with his bank against the card transaction it is known as Chargeback.
10. Chargeback Minimization
Measures taken by the merchant and payment gateway can be helpful in the Chargeback Minimization of both types – fraudulent as well as genuine.
11. Chargeback Reason Code
This type of code helps payment and financial institutions to identify the chargeback reason.
The person who is purchasing the product or the service and who is initiating the online transaction with the available payment methods to make the payment is called a customer or user.
13. Electronic Funds Transfer
The facility to transfer the funds using the online payment methods is known as Electronic Funds Transfer. NEFT, RTGS, IMPS, UPI, etc.
14. Fraud Prevention
The measures or systems to prevent fraud from the merchant or the customers are known as the Fraud Prevention Measures. This would include KYC, transaction monitoring, risk analysis, etc.
15. High-Risk Business
The businesses that include a high amount of chargebacks, high-risk business activities, etc are considered high risk.
Initial Coin Offering refers to the raising of funds for offering a new cryptocurrency. It is similar to the IPO (Initial Public Offering). IPO is raising the funds at the time of a new company going public.
Integration means in layman’s language, adding the payment gateway to a website or mobile application. The Payment Service Providers have ready Plugins and SDKs for various platforms which would make it very easy for the merchants as it would require no complex coding.
18. International Bank Account Number
IBAN is the term used in international settlements.
19. Issuing bank
It is the customer’s bank that holds the account from which the payment is authorized and deducted. It provides the net banking facility and also issues various types of cards such as credit cards or debit cards. It provides various other facilities, statements, etc.
Know Your Customer is a verification process of any applicant through required details and documents. The financial institutions, payment gateway/aggregators, etc carry out this process to verify the merchant or the customer.
20. Maintenance Cost
These are the payment gateway fees charged for the service cost, upgrades, maintenance, etc. Maintenance cost is mostly periodic such as quarterly or yearly. However, not all payment gateways charge this.
21. Merchant Dashboard
This is a tool for the merchant and a one-stop place for them for various payment gateway-related functions, analysis of transactions, testing, settings, registration, etc. It is an account and is activated for real-time records after the registered merchant account approval.
A merchant is the one who is selling the product or the services. He would get the payment gateway merchant account (refer 24) to accept the online payments. For example the eCommerce website seller.
23. Merchant Category Code
A code that helps with the classification of the merchant as per the types of services or goods that the merchant sells is called the merchant category code. It is 4 digit code with the help of which the card companies classify the merchant.
24. Merchant Account/Nodal account
This type of account helps the merchant to accept online payments. It is a payment gateway account over which the acquiring bank (refer 2) has control. Its sole purpose is to accept the payments on behalf of the merchant and settle the funds to that merchant. IT includes other functions such as processing the refunds.
Thus, the funds paid by the customer are first collected in the merchant account, and then as per the settlement cycle, it would be automatically settled to the merchant’s business bank account.
The identification number that the payment processors allocate to the merchants for processing the payments is called the Merchant Identification Number (MID)
26. Onboarding Process
This is the process for the activation of the registered merchant account. The KYC, risk analysis, fraud detection, coordination, and communication takes place in the onboarding process.
Like an offline purchase is called an Order, when the customer makes an online selection of the product or services, moves it to the checkout, and proceeds with the payment, an order is created at the side of the merchant and the payment gateway.
A secure code sent to the registered mobile number for authentication of the transaction is called the One time Password (OTP).
29. Payment Gateway/Aggregator
The aggregator integrates different payment modes and makes the technical tie-ups for the same to facilitate the merchant and the customer with multiple payment methods.
30. Payment Method
Various options through which the customer can pay are known as the payment methods such as debit card, net banking credit card, UPI, Wallets, EMI, etc.
31. PCI DSS Compliance
Payment Card Industry Data Security PCI-DSS compliance is the maximum level of the security measure for card payment processing. PCI DSS is a set of security standards designed by Visa, MasterCard, Discover Financial Services, JCB International, and American Express to ensure that all companies that accept, process, store or transmit credit card information maintain a secure environment. It protects the cardholder from data leaking and online payment frauds.
When the customer’s payment is returned to the customer due to any reason then it is known as the Refund. The code for the identification of the refund is known as the Refund ID.
This is the stage in the payment processing wherein the payment made by the customer is processed from the merchant account (refer 24) to the merchant’s business bank account.
Settlement is done as per the settlement cycle meaning to the say the predetermined settlement duration for example t+3 working days (refer 7 – Business Days).
34. Smart Routing
The transaction will be automatically routed through different channels to enable a high success rate based on the payment mode, card issuer, card scheme, or card bin.
The various encryptions and the cryptographic functions including the public key and the private key used to secure the connection between the server and the website is known as the Secure Socket Layer (SSL).
It provides security in the online business when the data is transmitted from the customer’s side to the merchant website through the payment gateway.
Transaction Discount Rate (TDR) is the percentage fee that the acquiring bank charges for online transactions. The fee is distributed among various parties involved in the transaction such as the payment processors, card networks, issuing bank, etc.
37. Tokenization/Encryption Standards
For the safe processing of the transactions, following the encryption standards is of utmost importance. It enables the transmission of the data in a coded manner and prevents security breaches.
The payment process initiated at the payment gateway checkout is known as the transaction. The unique code assigned to the transaction is known as the Transaction ID.