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What Is An Internet Payment Gateway?

An internet payment gateway works somewhat like traditional point of sale systems, but on a virtual level. First, the credit card information has to be gathered. This is done by the customer entering their payment information into your shopping cart software or other form. The card information is then encrypted and transmitted over a secure server to the bank processing service. When the processing bank receives the information, the payment is either approved or declined. Whatever the result, the data is sent back to your website, where it is displayed to the customer. This lets the customer know their order has been processed, and that their product will be shipped out right away.

As far as your business side is concerned, you will likely receive daily reports about your transactions, and receive daily or weekly payments based on the transactions processed. This is much faster than merchant accounts, and also saves you time on order fulfillment. Instead of waiting to see if payment clears before shipping, you need only worry about shipping to customers who completed the entire check out process. Even if you don’t have their money yet, you are guaranteed to receive it if the processing bank approved the transaction.