Ten years ago, when people would purchase goods from traditional brick and mortar stores, the term ‘payment gateway’ would sound strange. Along with the massive growth of e-commerce and online stores, the vital role of payment gateways cannot be neglected.
A payment gateway is a service which processes credit card authorizations and other online transactions, e.g. bank transfers between merchants and customers. A payment gateway can help you accept payments (money coming into your business) and send funds (money going out from your business). Payments are securely processed in real time.
For example, customers enter credit card details when placing an order, which is then sent to the payment gateway to be encrypted before being routed to an acquiring bank for charge and the issuing bank for authorization. When the bank authorizes the payment it will be processed, or if the payment is declined the transaction will immediately be cancelled. This seemingly complicated and lengthy process only takes a few seconds.
A payment gateway offers a myriad of benefits for both customers and merchants.
Safe and secure
Payment gateways specialise in payments and typically provide a safer way to execute transactions that if you tried to secure transactions yourself. For example, each gateway has a unique method of detecting fraud. In Xendit’s case, this includes inputs such as delivery address verification, velocity pattern analysis, identity morphing detection and geolocation.
Customers trust online businesses which use payment gateways rather than manual transactions because they are reassured by the security and confidentiality of personal details entered on the website. As a result, payment gateways keep visitors returning to the merchant’s website and helps merchants sell even during the least convenient of hours.
Payment gateways convert currencies from around the world, helping customers purchase a merchant’s product even if they do not have a bank account in the merchant’s country. This feature enables merchants to use the one payment gateway across the globe.
One connection to rule them all
Merchants need payment gateways to simplify the hassle of dealing with the complexity that comes with payments. For example, integrating with Xendit means saving the effort across various banks so you don’t need to f create multiple bank accounts to receive payments. Merchants only need the one account in which the payment gateway can securely send funds from transactions made by customers from all kinds of banks. This saves you effort from negotiating with each bank for their payments products one by one and instead, you can focus on your core business.
The tech solutions offered by a payment gateway also give merchants another advantage. Merchants are not only able to accept payments from credit cards but also via direct debit (BCA Klikpay, Mandiri ClickPay, CIMB Clicks, e-Pay BRI), e-wallet (t-cash, XL Tunai) and bank transfers. Some payment gateways even accept payment from mini markets as well as virtual accounts.
Xendit was the first in Indonesia to offer unlimited, instant transfers to 140+ banks in Indonesia, even on the nights and weekends. This feature is usually utilized by P2P (peer-to-peer) lenders since they can build fully automated disbursements based on the merchant’s risk model. It requires no humans, no tokens and therefore, no human errors. This technology enables the processing of thousands of transactions in a few hours vs few days.
When it comes to user interface, payment gateways can save time because they are fully equipped with a dashboard to assist merchants in reconciling sales. This includes sales reports, customer details, voiding transactions and refunds and full line by line reconciliations. Merchants will no longer have to waste productive hours manually reconciling transactions.
Some payment gateways like Xendit also allow merchants to recognize, analyze and be notified in real-time when a customer has paid — no more waiting for a customer to confirm payments manually. These real time notifications save your finance team time and provide competitive advantage above your competitors given the improved customer experience. Real time reports can be retrieved from the dashboard as well.
A payment gateway is beneficial for both customers and merchants by saving customers’ time and making them feel secure in carrying out a transaction. For merchants, efficient payment gateways ease multiple processes while they also benefit from increased trust from customers.
If you have further questions about payments, especially about the case studies in Indonesia, we’re here at Xendit are super open to answer your questions. We’re just one tap away over online chat, WhatsApp, or email.