Payment Gateway

Payment gateway is like a digital bridge that connects your online store to customers' banks. It's a secure system that handles the payment process, ensuring your customers' financial information stays safe.

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Think of it like this: When you buy something online, you enter your card details on the website. The payment gateway takes this information and sends it to your bank for verification. If the bank approves the payment, the money is transferred to the merchant's account.

Settlement in a payment gateway refers to the process of transferring funds from the customer's bank account to the merchant's account after a successful transaction. It's the final step in the payment process.

Here's a simplified breakdown:

  1. Customer makes a purchase: The customer enters their payment details on the merchant's website.
  2. Payment gateway authorization: The payment gateway sends the transaction details to the customer's bank for authorization.
  3. Bank approval: If the bank approves the transaction, the funds are reserved from the customer's account.
  4. Settlement: The payment gateway transfers the funds from the customer's bank to the merchant's bank, typically within a few business days.

Factors affecting settlement time:

  • Payment method: Credit card settlements may take longer than debit card or digital wallet payments.
  • Bank processing times: The speed of the banks involved in the transaction can influence settlement time.
  • Payment gateway policies: Each payment gateway has its own settlement schedule.

In summary, settlement is the crucial step where the merchant receives the payment for the goods or services sold.

Examples of payment gateways:

  • PayPal: A popular online payment platform that lets you pay without sharing your card details directly.
  • Stripe: A flexible payment platform used by many businesses, including Shopify and Etsy.
  • Razorpay: A popular payment gateway in India that supports various payment methods like UPI, credit cards, and debit cards.
  • Paytm: A popular Indian payment app that also functions as a payment gateway for businesses.

In essence, a payment gateway makes it easy and secure for customers to pay online, boosting your business's sales.

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He is an accountant based in Kathmandu, Nepal. He holds an MBS and an LLB degree. In his free time, he enjoys cycling, hiking, reading, gardening, and spending time with friends and family. He is passionate about learning and sharing his knowledge with others.

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