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Virtual Point
of Sale (VPOS)
3. Select
a Payment Gateway
The payment gateway is the service that connects your payment interface
to the financial network. Gateways take the payment information
from the application, ensure that the data is valid, format it appropriately,
and send it on to the financial network for authorization, settlement,
etc. Gateways typically also offer advanced features such as reporting
and transaction management.
When you select
a gateway, make sure that they can connect to your interface of
choice (some gateways may also offer their own payment applications
that you can take advantage of). Also make sure that they can connect
to your merchant bank (so that funds can be deposited to your account).
Finally, determine what other features you are looking for in a
payment gateway, such as recurring payments, ability to process
in multiple currencies, email notification of orders, fraud screening,
etc. Shop around and ask lots of questions. Once you connect to
a specific gateway, switching can be expensive and time consuming.
4. Payment-Enable
Your Application
Once your gateway has been selected, someone needs to connect it
to your payment interface and customize it to meet your needs (if
it is customizable). This is typically the job of your developer.
Make sure that the developer has done this kind of work before,
and will be around if you need changes in the future. Be explicit
about your requirements and document them so that they are unambiguous.
5. Test and
Launch
Since it’s your money that is being processed, be meticulous
about testing the application. Use a real credit card (for each
credit card type your are accepting) and process a small transaction
(e.g. $1.00) to make sure that the payment is authorized properly
and that it settles to your bank account. Once you launch, problems
are difficult to fix without affecting your customers.
6. How Credit
Card Processing Works
In a typical credit card payment scenario, the transaction flow
would progress as follows:
- A purchaser
sends credit card and other related information to the Gateway
via a web site order form, Virtual Point of Sale (VPOS) terminal,
wireless device, IVR system, or other Internet-enabled device.
- The Gateway
receives the information, validates the credit card number, and
forwards the authorization request to the purchaser's credit card
issuer. Here, the consumer's credit card account and funds availability
is verified.
- An authorization
(or decline) response is returned via the Gateway to the payment
application. The Gateway securely stores all credit card and related
information on its servers.
- Upon approval,
the order can be fulfilled by the merchant.
- Once the
order is fulfilled, the merchant can notify the Gateway to send
a settlement request to the merchant's acquiring bank.
- The merchant's
acquiring bank deposits the appropriate funds into the merchant's
business bank account.
The above process
is highly simplified. Many players are involved in the above process
and they must all work together seamlessly for a successful transaction
to occur. This is why testing is so important prior to launch, and
why it is critical that all of the players connect to one another
properly so that information can be exchanged error-free.
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Written by: Robert Levings
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