Our first player that a merchant needs to pay in the process is called Payments Gateway. Here is some history that is very a few people remember. Before companies like PayPal ,BrainTree and Stripe were exist , for a business to be able to accept credit cards was almost impossible. To accept credit cards , a business needed to apply for a merchant id or merchant credentials and to go through an underwriting process, pretty much like to take mortgage. The Payment Processors did not deal with merchants that processed less the 1 million dollars per day, has their own IT department, going through their PCI Compliance certification audit on the annual base and this is just an example .
A lot of people in the world are confused and don't understand what does this player do. So please let me surprise you with something you always knew but did not think about. Yes, PayPal, Square, BrainTree and Stripe the most known Payments Service Providers on the earth are actually Payments Gateways .
So what is the role of Payments Gateway is a constant argument. People in the Fintech or Merchant Services industry like to call this player as a handyman. Basically, this player does what we don't want to deal with.
So here is a list of some of the functions that Payments Gateway does :
- Simplifies Integration process for non-technical people to start their online business within several clicks.
- Reduce development effort for professionals
- Reduce scope of PCI Compliance
- Caputes and settles funds for different bank accounts
- Shortens applying and underwriting process from weeks of waiting to a couple clicks.
- Rules engine for various of transaction types
- Checking frauds against different fraud prevention tools and services if paid for.
- Managing different financial and settlement reports
- Managing a lot of high-lifting for merchants
Most important that since something like Payments Gateway was introduced to be able to accept payments in eCommerce became a way more easier than it was before. By a couple of clicks you can have a merchant ID from Stripe, Braintree and several others .