ALL ABOUT PAYMENT GATEWAY IN INDIA

ALL ABOUT PAYMENT GATEWAY IN INDIA

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ALL ABOUT PAYMENT GATEWAY IN INDIA

CONCEPT

A Payment Gateway is a service relating to ecommerce which processes credit/debit cards payment for online as well as for brick and mortar stores. To facilitate such kind of transactions it transfers crucial information between various payment portals (mobiles or websites) and bank or processor. Payment Gateway plays a very vital role in transaction process as it authorizes the payment between merchant and customer. Few popular Payment Gateways are: – PayPal, Stripe, Shift 4, Square etc.

WHAT IS PAYMENT PROCESSORS

Payment Processors (often a third party) appointed by the merchant to help Payment Gateways to authorize the transaction of funds between buyers and sellers by transmitting transaction data. Payment Processors are of two types: front-end and back-end.

HOW PAYMENT GATEWAY WORKS

When a customer buys a product either from online store or from brick and mortar store, the payment gateway performs various tasks to initiate as well as to finalize the transaction of funds.

  • Encryption: The web browser of the customer encrypts the data that is to be transferred to the vendor’s web server. The payment gateway after this process sends the transaction data to the payment processor utilized by the seller’s bank.
  • Authorization Request: The payment processor now transfers the transaction data to a card association. The bank which issued the credit card views the authorization request and upon its discretion the bank ‘approves’ or ‘denies’ the request.
  • Filling the Order: After sending the authorization request, the processor then forwards an authorization to the payment gateway pertaining to the consumer and the merchant. Once the payment gateway obtains the authorization, it transmits the authorization to the website (webpage where the process of payment isinitiated). Here, it is interpreted and an appropriate response is generated. All these steps though seem complicated, take few seconds to complete the process.
  • Clearing Transactions: The above process is repeated in an effort to ‘clear’ the authorization through successful accomplishment of the transaction. The clearing is only triggered when merchant completed the transaction (till the merchant ships the order).

OTHER FUNCTIONS OF PAYMENT GATEWAYS

Payment Gateway screens each and every order with many helpful tools. The screening process identifies as many frauds as possible. Few tools are: –

  • Delivery address verification AVS checks
  • Computer finger printing technology Velocity pattern analysis
  • Identity morphing detection Geolocation
  • Payment Gateways also calculate tax amounts to authorize requests transmitted to the Payment Processor.

REQUIRED DOCUMENTS

Most startups are confused about the legal documents that are required for applying for Payment Gateway. Everyone wants integrated payment gateway on their portal and hence every gateway company have different policies. But there are few common documents which are required by all payment gateway company.Basically documents depend upon the type of business that one indulges in. There are 5 types of business formation: –

  • Sole Proprietorship Firm
  • Private Limited Company (Pvt. Ltd.)
  • Partnership Firm
  • Limited Liability Partnership (LLP)
  • One Person Company

Following is the list of documents required for any type of business formation: –

Photo Proof (Signing Authority) Pan Card copy

 

Passport copy or Driving License copy or Election Card (Self Attested Required sign and Company Stamp on it)

Office Address Proof Own Property – Electricity Bill

 

Rent Property – Rent Agreement

copy and Electricity Bill

 

Bank Account – Statement or

Passbook

 

Additional Documents Individual (No additional documents required)

 

Sole Proprietor

 

Partnership/LLP Firm

 

Private Limited

 

Cancelled Cheque For the bank account into which you will be receiving payments.

 

Financial Proof Current Account statements for the last 12 months with Bank seal and Bank logo or Audited Balance Sheet with P & L Account statements for last 2 years.

 

 

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