What is Payments Infrastructure? How Does it Work?
Payments infrastructure (PS) is a system that coordinates the many links that enable electronic payments. It includes card schemes, payment gateways, processors and merchant accounts.
Generally speaking, PSs serve the needs of customers, merchants and card issuers by managing the flow of funds from the buyer to the seller and back again. These systems also support payment issuance, processing, settlement and other financial transactions.
A card payment made when the customer swipes or taps a credit or debit card at a merchant’s point of sale (POS) device, which then transmits the card information to a merchant’s acquiring bank through a gateway.
Once the transaction is approved, the acquiring bank credits the merchant’s account with the amount of the purchase.
When you make a purchase on a website or in a store, the payment gateway connects with the customer’s card network to securely send card information from the merchant to the issuing bank for verification.
This process is called a secure connection, and it makes the process of accepting credit card payments easier for both parties.
The gateway then routes the card information to a processor, which is a service that gathers the customer’s card information and passes it on to the merchant’s acquiring bank. When the payment accepted, the processor sends a notification to the merchant and the card networks about the transaction.
Payments infrastructure (PS)
If the transaction declined, the processor relays a message to the payment gateway, which then passes on the card information to the issuing bank for verification. This done to protect the customer’s privacy, as well as the merchant’s.
To avoid fraud, merchants must keep sensitive cardholder data protected. A payment gateway often uses tokenization to anonymize credit card details and ensure that only the customer’s card number and expiry date transmitted. It can also help you meet industry-wide security guidelines, such as PCI standards.
In addition, a payment processor can use a variety of tools to detect and prevent fraud at the source. It can also provide an online dashboard that tracks all of your payment transactions to help you see which ones are risky and identify potential issues before they occur.
For example, Stripe Radar is a powerful fraud prevention tool that uses adaptive machine learning to evaluate every transaction for risk and take appropriate action. It’s available as part of Stripe’s integrated pricing.
Whether your business is just starting out or has been in the industry for years, you may need to add a payment gateway to accept credit and debit cards. Adding this capability can simplify your payments processing, reduce costs and free up valuable time.
A payment gateway is a type of technology that captures and stores information from card readers or other device readers, then transmits it to a processor. This allows you to manage your customer data and transactions, ensuring that you comply with PCI standards for security and privacy.
It can also allow you to streamline your business by connecting directly to the card networks, removing the need for third-party dependencies.
