The traditional online payment acceptance requires merchants to opt for a merchant account and payment gateway, but in the new era of technology, both of these things don’t matter anymore.
What is a payment gateway?
A payment gateway is an essential entity for accepting online payments. It enables online payment acceptance by approving the transaction process between merchant and customer.
In addition, it also encrypts the sensitive card details and sends the data to the processor for further proceedings.
How does a payment gateway work?
It facilitates the online transaction by transferring the information between the payment portal and the acquiring bank.
Working of a payment gateway can be broken down into three major points,
- The web portal sends payment details to the payment gateway.
- The payment gateway encrypts the details and sends a request to the customer’s bank for authorization.
- Based on the status of the payment, i.e. success or failure the customer’s bank transfers the amount/funds to the merchant.
For detailed working – read here
What is a merchant account?
If you want to accept online business, you had to have a merchant account. After an online transaction is done, the amount gets deposited in the merchant account.
The merchant account is held in the acquiring bank.
After the online transaction is initiated by the customer, and the essential checks are done by the issuing bank and card network, the status and transaction details are forwarded to the acquiring bank.
But while the whole process of authentication and authorization takes place, the merchant account holds the transaction amount and after the transaction completes successfully the amount gets transferred from the merchant account to the business account.
SO, the traditional online payment can be described as,
But this scenario can be changed to,
Lyra’s robust and seamless payment solutions help businesses to put their entire emphasis on managing only business-related operations as Lyra takes over your major responsibility of managing online transactions for your business on an everyday basis.