The basics about payment gateways and ECIGARETTE merchant accounts

The e-commerce industry is an ever-growing one. Each day, the number of traders setting up online stores is increasing. There are several ways in which businesses can accept payments online. The two basic methods employed in accepting payments are payments gateways and merchant accounts.

The following is a detailed explanation about the factors which differentiate a payment gateway from a merchant account:

Merchant Account – Merchant accounts are also known as known as online credit-card payment accounts, online credit-card processing accounts, card transaction accounts, e-commerce merchant accounts. These accounts allow businesses to accept the various forms of card payments such as gift cards, debit cards, and credit cards. A trader can acquire this account from financial institutions such as banks or from a merchant account provider. Ecommerce accounts are services implemented by merchants so that online card processing services can be utilised. The procedure to acquire a merchant account depends on the type of ecommerce account and the provider. The rates and fees vary with different merchant service providers. The benefit of having merchant accounts are they have aid it automating businesses.

Payment Gateways – Payment Gateways are services that authorise payments for online retailers and e-businesses. A payment gateway is attached to a credit-card issuing network. The important function of processing credit cards is encryption. Gateways use a specific encoding technology for encrypting and decrypting all the information sent through the payment gateway. With the absence of encryption, the data on a credit card can easily be stolen.

Following is a general description of the working of a gateway:

  1. The purchase of a service or product is made by a consumer when he/she clicks on the “ORDER” button on a trader’s site.
  2. The consumer is then told to fill an order form where details such as shipping information and cardholder information need to be specified.
  3. After the consumer clicks on the “SUBMIT” button, the information gets encrypted by the web browser of the cardholder. After this, a key is produced after which it is passed to the trader’s gateway.
  4. The trader’s gateway then decrypts a part of the information received after which a re-encryption process takes place and this is now sent to the acquiring bank of a merchant.
  5. The bank then forwards the received information to the bank that has issued the credit card for authorization and verification.
  6. A kind of response code is sent by the issuing bank to the merchant bank. The merchant bank in turn sends this code to the gateway.
  7. The billing of the credit card then takes place and the funds get transferred to the trader’s bank. Finally, the funds are deposited into the trader’s account.

The payment gateways as well as merchant accounts are important components to set up automated businesses. They have a vital role in increasing the number of customers and sustaining repeat customers. The success of a business in a way is dependent on acquiring merchant accounts with gateways. Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a high risk merchant.