A Guide To Payment Gateways: All You Need To Know

Payment gateways have become ubiquitous in our society. They are safe, secure, heavily encrypted, and offer a quick & easy way to authorize payments across multiple platforms. Most payment gateways allow customers to make payments in many manners, from debit/credit card payments & net banking to UPI, digital wallets, & even wire transfers. They are found everywhere, from brick-and-mortar shops to online assignment writer & essay help services, making payment gateways one of the most commonly used technologies.

So, what are they? What goes on behind the scenes, and what technologies make payment gateways so secure, agile & scalable? How do businesses integrate them so quickly?

This article aims to answer all these questions and more as it takes a deep dive into technologies powering the world’s largest payment gateways.

Understanding Payment Gateways and Their Operations

A payment gateway is a digital mechanism that analyses & transfers payment information from customers to the merchant with authorization from a valid third-party regulatory body. The primary job of any payment gateway is to capture data and make it available to all the other parties involved parties.

Most payment gateways are cloud-based and are available at point-of-sales systems or card readers where transactions are processed.

Payment gateways have specific key stakeholders, namely:

  • The Merchant:  The commercial establishment with which a customer has engaged
  • The Consumer:The entity making the purchase
  • The Issuing Bank:The financial institution where the customer has an account
  • Acquiring Banks: The bank that receives the payable amount, that is, the one that holds the merchant’s account

How Does A Payment Gateway Work?

Step 1: The consumer initiates a transaction by clicking a buy now button on a merchant’s website.

Step 2:  The payment gateway springs into action. It first tallies whether the customer is a verified account holder with the issuing bank and checks whether the customer has a sufficient balance. It will also check whether the transaction won’t’ exceed the customer’s credit limit or account balance.

Step 3: The payment gateway sends over encrypted data regarding the customer card information to the appropriate card scheme.

Step 4: The card scheme approves the transaction, and the payment gateway then sends the necessary information to the merchant website, asking them to validate and complete the transaction.

Step 5: The payment gateway finally sends information to the acquiring bank to receive money from the issuing bank and the customer’s bank account to the merchant’s account.

Payment gateways use distinct technology stacks for streamlined operations & integration. So let’s take a closer look.

Essential Components Of A Payment Gateway Technology Stack

A technology stack comprises all the components essential for successful, scalable, and flexible digital payment solutions. The critical yet generic constituents of payment gateway stacks used by prominent companies such as Stripe, PayPal, Paytm, and Rapyd are as follows.

  1. The Fraud Protection Systems

Security and authenticity are essential features of any gateway system. There are fraudulent detection and protection systems in place that use machines & deep learning to detect suspicious activities. Supported by a robust framework and decisive security measures, payment gateways implement the best security and data protection practices to make things impeccable and impenetrable.

  1. Scalable Settlement & Reconciliation

As companies grow and expand, the volume of purchases can increase exponentially. Therefore, technologies must be able to cope with growing demand and heavy traffic & be secure and resilient throughout.

Settlements and reconciliation systems must be able to process, store, and transfer data without losses. At the same time, they must be able to maintain integrity and security. Systems must be able to maintain proper records of each & every transaction and be able to check information with regulatory bodies without any hassle.

  1. Tokenization

Random alphanumeric tokens are assigned to a processing system. With a unique character set, these tokens replace sensitive information such as a person’s International Bank Account Number, password, CVV, debit/credit card number, etc. They act as distinct digital identifiers and prevent sensitive information from being exposed to unauthorized parties.

  1. Reporting

A system that monitors maintains, and delivers real-time reports of all transactions and activities is also a vital component. Every payment gateway NEEDS one to track the multitude of payments occurring every day.

All reports and records must be accessible at any time in both summarized & detailed formats to all authorized entities. In addition, typical records must be maintained: transaction activities, bank details, account information, processing fees, chargebacks, etc.

  1. Payment Gateway Integration

Seamless integration is crucial. API of gateway systems can make them accessible and integrable by one & all. Systems can then be made available across point-of-sale regions and various platforms. Simultaneously, they must be able to process and consolidate different kinds of transactions across multiple channels safely & securely in every case.   

  1. The Checkout Interface

A good checkout UI provided users with a seamless payment experience. It must be able to provide them with everything necessary to pay and checkout without any hassles. Convenience, speed, and security are the most critical factors here.

The above six components power almost every innovative payment gateway firm worldwide. Advancements in the tech sector have led to rapid operational efficiency, security, growth, and sales improvements. Firms such as PayPal, Stripe, Cred, etc., now offer a variety of innovative payment solutions as commodities to individuals, merchants, and businesses all over.

We wrap up this write-up with a look at the technologies behind the scenes of two of the biggest payment gateways today, PayPal & Paytm.

The Technologies Running PayPal & Paytm

PayPal is a financial technology company based in the United States. It is one of the largest online payment gateways worldwide and employs various technologies, software architectures, IT, and security measures for safe & smooth operations at any scale.

  • Typical technologies powering PayPal are relational database management systems Oracle, MySQL, NoSQL, MongoDB, Cassandra, , for information handling and data warehousing.
  • The client-side programming language used to design the UI in JavaScript, HTML5 for markup languages, JSON-LD   & Open-Graph as structured data formats, etc.
  • PayPalalso leverages ReactJS while the Node & Kraken JS frameworks are employed in the back end. Java is also employed heavily in PayPal’s backend, with the Spring Boot framework used to design REST architectures.
  • PayPal also uses Apace Hadoop & Spark, Elastic Search, & Teradata for business & big data analytics.

Next, we look at the different technologies used by one of Asia’s biggest payment gateways, Paytm.

Paytm has more than 200 million monthly subscribers and processed nearly 1 billion transactions in 2018. However, the outward simplicity of Paytm belies its complex underlying infrastructure.

  • At Paytm, a product is anything the consumer is interacting with. Paytm implements the Unified Payments Interface and then builds upon it. P2P, P2M, B2B, etc., are different use cases of Paytm, allowing the consumer to work seamlessly with various products/services. Integrating multiple services under a single platform makes Paytm more beneficial to consumers and businesses.
  • Paytm’s technology stack is genuinely a software engineering marvel.

The system implements numerous languages and frameworks such as Node.js, ReactJS, and MongoDB. AngularJS, Spring Boot, Kafka, Cassandra, Aerospike, the Android SDK, Bitbucket, New Relic, Datadog, as well as a wide variety of languages such as Java, and Python, MySQL, PHP, etc.

It avails AWS EC2 for cloud processing and storage and Docker, AWS Elastic Load, DataDog, Grafana, etc.

Well, that’s all the space we have for today. Hope this article was an informative read for one & all. Designing payment gateway architectures is a significant application case in software engineering and design. Look for assignment help from professional assignment writers if things seem too complex & overwhelming.

Author-Bio: Greg Clinton is a full-stack developer, systems engineer, and DevOps specialist with a leading software firm in Hobart. In his free time, he offers part-time tutelage at EssayAssignmentHelp.com.au., a top assignment help service Down Under.

Leave a Comment