The eCommerce market in India is rapidly growing. With so many eCommerce platforms popping up each year, the need for an online payment terminal is also being felt. Fortunately, many businesses are quickly resorting to payment gateways to manage their transactions with customers. But what is a payment gateway and why are they important to online businesses? Let us try to understand it in detail.
What is a Payment Gateway?
A payment gateway is an online portal that accepts payments made by customers via different sources on behalf of the merchant. Payment gateways do not have to be online only. The brick and mortar portals found in many shops or points of sales also go by the name of payment gateways. But, by and large, the term refers to the online portal only. An example of a payment gateway would be Cashfree Payments.
Importance of Payment Gateway
Once you have understood what is a payment gateway, it is time to go through its importance, especially in today’s market. As businesses are going online, especially after the Covid pandemic, getting a portal that can manage transactions is the need of the hour. There are several reasons that make payment gateways so important. Here are some of them:
One of the major advantages of using a payment gateway is the speed at which the transactions take place. If you are using a payment gateway that works at a fast speed, then it will take only seconds for the payment to get transferred from the customer’s account to the merchant’s bank account. The transaction is facilitated and authenticated with the help of the payment gateway.
An important thing to note about payment gateways is that they are pretty safe. A lot of things go between the customer making the payment and the merchant receiving it. This is the space where frauds and scammers can easily take advantage of the information provided by the customer and rob the merchants of their income. But with the arrival of payment gateway, the problem has been mitigated to a great extent. Payment gateways are highly secure and many use security features like 2-factor authentication and biometric. All of these features make it extremely difficult for a third party to crack the information.
Many retailers in India are of the view that setting up a payment gateway for their business might not be a fruitful idea as the service charges are quite high. But this is not at all true. When you read in detail about what is a payment gateway, you will find out the cost of set-up for payment gateways is pretty minimal. They charge a nominal fee which any business, irrespective of their scale, can maintain.
Acceptance from Multiple Sources
Another major advantage of payment gateway is that they accept payment from multiple sources. So whether you are using a credit card or debit card or UPI or wallet transfers, all of them are accepted by payment gateways. This makes it pretty easy for both the customers and the merchants as they can send and accept payments with quite an ease.
Improved Cash Flow
When you receive payment through conventional methods, it can take 2-3 business days for the payment to be processed and to be received in your bank account. But with the intervention of a payment gateway, you can get your payments instantly. This will significantly improve your cash flow.
Once you have figured out what is a payment gateway, you will realize how valuable it can be for blooming businesses. They can handle their transactions with so much ease. Also, with a fast and secure portal, customers will be encouraged to buy products and take online services to a larger degree.