Learning about Payment Gateway - part 1

In this article, we will learn about how the payment gateway works across all the customers(merchants, acquirers and issuers) and how it works across UPI, Wallets, ATMs, Debit cards, credit cards and online payments.

First, let's understand what is a payment gateway -

Payment Gateway is a software program that connects merchants, issuers and acquirers to process the payment properly on every payment platform like Wallets, Cards and UPI.

For example, When we purchase a product on amazon, it will be redirected to the payment gateway as ccAvenue(as an example) and it will collect the details and then sends the request with the user data along with the amazon token id, authorization will happen between the gateway and the banks and as a response, we will get the details as Transaction Id, transaction type and transaction status to summarize whether a transaction is a success or failed transaction.

Difference between Online Transaction and Offline transaction -

Lets take a scenario to understand a offline transaction -

You go to a grocery store and purchase few items and you want to make a payment.Mostly in stores they use a pos machines which will accept card and UPI payment methods - first you swipe your card and it will go to acquirer and then issuer and it will give you a response whether the authorization is successful or not.

Lets take a second scenario to understand online transaction -

You purchase a product on ecommerce platform and enter the card details directly and complete the authorization and transaction will be completed. The advantage of going for online transactions is that an user can complete the transactions within a limited amount of time.

Payment process flow for online transactions:

This is all about payment gateway. In the next upcoming articles we will learn about the payment gateway authorizations(Authentication or confirmation) and payment settlements.