Payment Gateway | Merchant Solutions

A payment gateway is a form of online service that provides merchants with the ability to trade via the internet. Websites operate in much the same manner as a manual catalogue; cardholders select what goods or services they wish to purchase, before being redirected to a secure payment page that acts as a checkout for this virtual terminal. Payment processing works in largely the same way as when accepting physical credit card payments, but for the added role of the Payment Service Provider (PSP), which presents customers with an authentication page, as well as safely transferring card details to the merchant’s acquiring bank. The bank passes them on, in turn, to the respective card issuer for authorisation and confirmation is sent back to the merchant, again via the PSP. It is important to note, however, that PSPs do not contribute to the design or creation of the actual website.

All CNP (Cardholder Not Present) transactions are subject to a number of risks of fraud. There are several measures that merchants can take to reduce these possibilities, should they wish to accept credit cards over the internet:

3D Secure – perhaps the most common form of online fraud prevention is MasterCard SecureCode/Verified By Visa. These work like chip and pin machines, requesting that customers provide a form of security code before proceeding with a virtual transaction.

Fraud screening – this technology works by scanning for recognised patterns in cardholders’ transactions before details are passed to a card issuer. The merchant is alerted to any suspicious data and advised as to whether or not to accept credit card payments. This can also be used as an effective tool against any threat of chargeback. Merchant account providers, PSPs and specialised third parties can provide this service.

AVS/CSC – as previously discussed, this system allows merchants to seek immediate advice from their acquiring bank on whether to accept a particular transaction, often through their own credit card terminals.

With an ever-growing reliance upon the internet, card processing through a virtual terminal is becoming increasingly widespread in the business world. That’s why, as ever, merchants must seek attainable card processing solutions through their acquiring bank if they are to keep up-to-date with the latest in virtual security technology.

Stef Lenza

28th November 2011