Online payments have become a staple in our daily lives. In the financial year 2024, almost 164 billion digital payments were recorded across India. Out of which, according to the National Payments Corporation of India (NPCI), UPI transactions reached a record ₹18.41 trillion in 2024. Whether you’re purchasing your favourite pair of shoes, booking a flight, or paying for your streaming subscription, chances are you’ve interacted with a payment gateway. It serves as a bridge between the customer’s bank and the merchant’s bank, ensuring the smooth transfer of funds.
Understanding the workings of payment gateways is essential for any business looking to thrive in the e-commerce landscape. With the growing digital landscape and India becoming a cashless economy, knowing about these payment gateways is important.
What are Payment Gateways?
A payment gateway is a service that processes credit card, debit card, and UPI payments for online and traditional stores. It is a technology that enables seamless funds transfers between customers and merchants. The gateway transmits payment information from the payment portal (such as a website or mobile app) to the financial organisation that authorises the transaction.
Serving as a digital equivalent of a Point-of-Sale terminal in a physical retail setting, it ensures that the customer’s payment information is securely transmitted. This involves encrypting sensitive payment data and ensuring it is safely conveyed across the network within seconds.
The various stages involved in a typical online transaction, from the moment a customer places an order to the final settlement of funds, are interesting. Now that we know what a payment gateway is, let’s explore how it works.
Key Features to Look for in a Payment Gateway
When choosing a payment gateway, there are several features you’ll want to consider to ensure a smooth and secure transaction process. Here are some impressive features to look for:
A streamlined onboarding process is important for businesses looking to start accepting payments quickly. A payment gateway with quick onboarding allows merchants to set up their accounts, integrate the necessary systems, and begin processing transactions without extensive delays. This feature is particularly important for new businesses eager to start selling and generating revenue without the extra hassle.
Transparent and favourable pricing structures help businesses manage costs effectively. This includes reasonable transaction fees, no hidden charges, and cost-effective settlement processes, ensuring that the payment gateway is sustainable in the long run.
Developer-friendly APIs are crucial for seamless integration and customisation. These APIs should be well-documented, easy to understand, and provide robust functionality, enabling developers to integrate the payment gateway efficiently. Every business is unique, and this feature is particularly important for businesses that need custom solutions or advanced integrations.
Third-party validation ensures that the payment gateway adheres to industry standards and regulations. This provides additional security and credibility, as it demonstrates that the gateway has been independently assessed and meets the necessary compliance requirements. TPV is essential for building trust with both merchants and customers.
Payment gateways should also employ advanced security measures to protect sensitive payment information and prevent fraud. These measures include encryption, tokenization, secure payment gateways, and regular security updates. High security not only safeguards customer data but also builds trust and confidence in the payment process.
Real-time transaction tracking and reconciliation are critical for effective financial management. Payment gateways that offer instant tracking and reconciliation provide businesses with up-to-date information on their transactions, helping them monitor sales, manage cash flow, and resolve any problems instantly. This feature enhances transparency and financial control for the merchant.
A payment gateway that supports many payment methods, including credit and debit cards, digital wallets, UPI, net banking, and more, ensures that customers can choose their preferred payment option. This feature enhances the customer experience and leads to happier and more loyal customers.
A payment gateway that supports UPI intent flow allows customers to pay directly from their UPI-enabled apps in just a few seconds. This feature enhances the user experience by providing a fast and convenient payment method that most customers are already familiar with and prefer.
This feature is particularly useful for businesses with complex sales processes or those that require additional verification steps. Late authorisation allows businesses to delay the approval of funds until certain conditions are met, such as the availability of inventory or confirmation of order details. It ensures that funds are only collected when the transaction is ready to be completed, reducing the risk of returns, order cancels, and customer complaints.
Its important for businesses to have a seamless transaction procedure and this is where your payment gateway comes in. For your customers to come back again and again, a hassle-free and smooth payment process should be your topmost priority. A payment gateway that has a high-sucess rate for payments ensures that your customers leave happy and satisfied.
Choosing the Right Payment Gateway for Your Business
In conclusion, understanding how payment gateways work and their importance in the online transaction process is crucial for both consumers and business owners. These gateways act as the secure bridge between customers and merchants, ensuring that sensitive payment information is transmitted safely and efficiently.
You can consider brands such as Plural by Pine Labs, which is PCI SAD Q-compliant. Plural also provides essential features such as encryption, fraud detection, and multiple payment method support. By choosing the right payment gateway for your business, you can enhance security, increase convenience, and expand your reach.
