1. What is a payment gateway, anyway?
A payment gateway is a service offered by an e-commerce application service provider. Its primary function is to securely transmit payment instructions captured at a front-end (browser window, mobile phone, IVR) to the
card issuing bank.
2. So what does that mean, really?
OK. Let’s consider a typical business case.
Rebecca is a small business owner. Her company sells custom-designed logos via its Internet website. The business model is a pretty simple one.
Rebecca’s designers interview each customer to get an idea of the product or service that is to be represented by the logo. Then they go about the design work and when complete, post the logo on a secure website for download.
Before the icon can be downloaded the customer is prompted for payment. That payment information will be transferred securely to Rebecca’s web server via SSL (Secure Socket Layer). But that’s hardly the end of the transaction. Rebecca must deliver that payment information securely to the customer’s card issuing bank to let them know that she’s to be paid. Rebecca has many customers and she can’t possibly contact each of her paying customers’ banks to ask that the credit card proceeds be transferred to her account. Neither is Rebecca at all interested in storing her customers’ card information on her office server.
It is at this point in a commercial transaction that the services of a gateway provider are extremely useful. Rebecca’s gateway provider delivers the request to the issuing bank and returns the response instantly, without Rebecca having to store credit card information on her own office computers. Having secured the approval for payment, Rebecca can now allow her customer to download their purchase with the assurance the payment will be deposited to her account within a couple of days.
3. That’s pretty neat, but what does it have to do with ACH payments?
Up until a just a few years ago the term payment gateway was typically used only where credit card payments were concerned. Innovative companies such as Autoscribe saw the utility in routing ALL payments (ACH, credit, debit) through the same gateway so that the merchant would have a consolidated view of payment activity and just one place to look for reports or posting files.
4. So let me get this straight… both ACH and credit card payments will be routed through the gateway, even though they rely upon different settlement networks?
Indeed. ACH (Automated Clearing House) is a network used by banks to settle transactions against consumer and corporate bank accounts via the Federal Reserve. Credit card payments travel a very different path requiring that a request for authorization be relayed by the processor used by the merchant’s acquiring bank to the card issuing bank. By funneling both ACH and credit card payments through a single gateway, a merchant is able to go to just one place to know about ALL payment activity regardless of payment type.
5. And PaymentVision does this?
Yes. PaymentVision® is an online payment gateway that connects to the ACH and all major debit and credit card networks.