My Merchant Account Blog

Electronic Payment Gateway-The Start of a Transaction

Saturday, January 20, 2007

An electronic payment gateway, like LinkPoint, Payflow, Authorize.net, is the virtual connectivity between your website and the credit card companies.  These gateways will offer an API (Application Programming Interface), a secure website where you can actually direct your consumers over to process credit cards, and virtual terminal where you can actually enter credit card information to process (i.e. if you had a customer call you to place an order via the telephone).  

When the customer hit submits, the electronic payment gateway goes into action.  It sends the request to a transaction processor or platform (i.e. First Data).  First Data will then authorize or decline this transaction if they have the authority or sends it over to the acquiring bank.  The acquiring bank then sends it to the card association who takes the transaction and sends it to the issuing bank.  The issuing bank then authorizes or declines the transaction and sends the response back up the chain through the card association, to the acquiring bank, to the transaction processor, to the electronic payment gateway and then finally the response is displayed to the consumer. 

Each gateway will offer a fraud protection product.  LinkPoint has a product called LinkShield™. LinkShield™ combines the industry's top fraud-protection tools to provide an exceedingly comprehensive fraud protection service.  Since almost one hundred gateways go through First Data's Nashville Platform to process, this product is one of a kind.  First Data uses the technology from Fair Isaac® Falcon® and ClearCommerce Fraud Analyzer to provide the merchant with up-to-date information on the transaction.  Merchants are now able to fight fraud much better.  Unfortunately, this product does not seem to be offered by First Data or any of its registered agents.  And along with Verified by Visa (VBV) / MasterCard Secure Code (MSC), chargebacks can be a thing of the past.

Once the merchant gets the notification from the electronic payment gateway of a successful transaction, the merchant can begin shipping the goods to the consumer.  A batch is usually automatically ran at night and this will complete the transaction.  Batching the transaction will actually get the ball rolling for the merchant to get his / her money.  Up until this point, no money has been moved into the merchant's bank account.  For more information, please see How Does a Credit Card Transaction Get Processed.

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