State-Bank-of-India: Introduction to Payment Gateway

We are living in the era of eCommerce. All of us are connected to eCommerce some way or the other. Whether we are booking tickets for travel or purchasing groceries or making payment for essential services like electricity and water, we access the website of an online merchant to avail these goods and/ or services and make the corresponding payments online. We may be using debit or credit cards, wallets or the net banking facility of the banks for effecting the payments.

This eCommerce process involves connection between the merchant website and the various payment processing applications- card payment schemes, bank websites etc. Payment gateways enable this connection in a secure manner. Thus, they facilitate collection of sales proceeds by the online merchant.

There are several models of Payment Gateways based on how the payment information flows. The gateway may be self-hosted by the merchant or involve a redirection to a third-party service provider. There are benefits and drawbacks in both models. We have tried to explore these in detail in the relevant chapters of this course.

One of the main areas of concern in online commerce is that of security of payments. This affects all the stakeholders- the online merchant, the buyer and the payment gateway. There are standards such as PCIDSS that aim to ensure the security of card holder data in online payments. Another important factor in security is the Secure Socket Layer (SSL) certification. We have provided insights into these factors that affect the security of online payments.

Related to the security of payments is the detection and prevention of frauds. This is of vital importance to an online merchant as it will affect the profits and reputation. This aspect has been dealt with in the module on Preventing Frauds in payment transactions.

Payment Gateways have brought about the eCommerce revolution today. Without them we would not be able to buy or sell online. But then what is the outlook for the future? This has been addressed in the last module on Future Trends in Payment Gateways.