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Aditi Saha

Developing A Custom Payment Gateway

A payment gateway is a tech that grabs and transmits payment info from the buying side to those who accept this payment and then reports about the acceptance or refusal. Payment gateways encrypt sensitive financial data to verify that info is delivered safely.

Starting from providing financial info like card details to finishing the transaction, integrating payment gateway in the website is made of various stages.

  1. Once a user makes an order, they should type in card details to proceed.
  2. A system encrypts debit/credit card data safely using SSL encryption. Gateways obviate the merchant’s Payment Card Industry Data Security Standard (PCI DSS) compliance requirements.
  3. Then, the merchant passes information to their online payment gateway for the website. This is also SSL-encrypted data.
  4. A gateway then converts the message from XML to ISO 8583. After that, it sends data to the payment processor of the acquiring bank.
  5. A processor submits the data to a debit/credit card.
  6. A bank gets an authorization request, confirms the credit/debit, and submits a response back to the processor with a reply code.
  7. A processor passes an authorization response to payment gateways that, in turn, obtain the response to send it onto the corresponding interface. This stage is characterized as Auth. This process may last for up to three seconds.
  8. A merchant completes an order. The process described before can repeat to Clear authorization by fulfilling the transaction.
  9. A merchant sends all authorizations to their bank recipient for settlement via its processor.
  10. A bank makes the batch settlement query of the debit/credit card issuer.
  11. Settlement payment is made to the receiving bank.
  12. A bank keeps on depositing the sum of the confirmed money into the merchant’s account within 24 hours.

Who is Using a Payment Gateway?

If you belong to one of these groups, you will definitely benefit from using a payment gateway:

  • Information technologies (IT) companies that wish to expand business by serving as a payment platform provider.
  • Huge and influential merchants with great turnover who have no desire to be dependent on a third-party provider.
  • Hi-growth payment providers who are looking for a better, improved payment processing system.
  • Incumbent billing firms that wish to remove or upgrade their software;
  • Acquiring banking systems that would like to enhance their front-end solutions.

Legal and Security Requirements That You Should Consider

Taking into account the cybersecurity standards and regulations is rather vital. Memorize at least the basic points.

1. PCI DSS Compliance

Refusing Payment Card Industry Data Security Standard (PCI DSS) means providing unsafe financial operations, higher processing fees, and a threat of facing scammer’s activities. Mind that four compliance levels are known.

  • Gathering. There are several methods you may use: gather user’s info in a browser, server of your project, or on the merchant’s application server.
  • Storage. Saving data is possible on the marketplace payment gateway server or user’s native server.
  • Transmission. Decide on how you will transmit the info to the processor.
  • Processing. Finally, who will process the data? Choose between a gateway itself or the merchant.

2. EMV

EuroPay, MasterCard, and VISA are three payment systems that stand for this abbreviation. The idea is to avoid card-related fraud by exchanging various data between the card and the POS terminal thanks to the special inserted chip tech.

3. EMV 3-D Secure

Three domains are used to secure every single financial activity. Those are the payment acquirer’s domain, card issuer’s domain, and interoperability domain. Once a fraudulent chargeback takes place, obligations switch from the merchant to the card issuer. EMV 3-D secure is defined by SSL (TLS) communication and XML messaging.

4. Tokenization

What is the most effective way to keep possible threat scope at a minimum and defend user’s financial info? Right, interchanging credit/debit card data with tokens.

Setting up tokenization involves getting ready the hardware that will encrypt the card data and the software that will fully comply with PA-DSS guidelines. In case you wish to host in another place, these problems rest on the server provider’s shoulders.

5. P2PE

Point-to-point encryption is also called end-to-end, E2E, and encryption. Building communication channels between different devices is possible thanks to this technology. It makes it possible to prevent transferring safe information over an open network. This practice is useful for reducing the possible threats.

6. HSM

A hardware security module offers key generation, crypto processing with these keys, and defense in a safe, protected environment. Without applying HSM, guaranteeing full data security and leaving an electronic signature is impossible without any risks.

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