What is a payment gateway?
A payment gateway is an e-commerce service that processes payments for stores. A payment gateway is a secure way of accepting payment online. Payment gateways facilitate these transactions by transferring key information between payment portals such as web-enabled mobile devices/websites and the front end processor/bank.
Payment gateways fulfil a vital role in the e-commerce transaction process, authorizing the payment between merchant and customer. In order to accept payment on Woocommerce, the merchant will have to have a payment gateway installed and activated. There are various payment gateways available but one of the best in South Africa is Payfast, which we will discuss more in-depth later in the article.
How does a payment gateway work?
When a customer places an order from an online store, the payment gateway performs several tasks to finalize the transaction:
- Encryption: The web browser encrypts the data to be sent between it and the vendor’s web server. The gateway then sends the transaction data to the payment processor utilized by the vendor’s acquiring bank.
- Authorization Request: The payment processor sends the transaction data to a card association. The credit card’s issuing bank views the authorization request and “approves” or “denies.”
- Filling the Order: The processor then forwards authorization pertaining to the merchant and consumer to the payment gateway. Once the gateway obtains this response, it transmits it to the website/interface to process the payment. Here, it is interpreted and an appropriate response is generated.
- Clearing Transactions: The process outlined is repeated in an effort to clear the transaction, this is only triggered once the merchant has completed the transaction.
Payfast enables South African Businesses to accept payments securely online. This allows for an instant transfer of money from online buyer and sellers. Payfast eliminates the need for a merchant bank account and can be used with any account (personal/business).
Payfast allows merchants to accept funds from local and international customers from anywhere in the world in South African Rands.
Payfast adds extra security for both the merchant and client when a payment is made it reflects immediately in your Payfast account and will be eligible to be paid out after a 48-hour security and fraud review holding period.
Payfast is an easy to use platform that easily integrates with Woocommerce. This integration will allow you to accept payment for customers, via various payment methods, such as:
- Instant EFT
- Credit Cards
- Masterpass
- Mobicred
- Debit Cards
- Bitcoin
- Scode
Difference between Payfast and Paypal
The first difference is the accepted currency, at the moment PayPal does not accept South African Rands as a currency. Paypal is limited to one payment method, this would be a deal-breaker for most customers. Payfast, on the other hand, allows users to choose from a wide variety of payment methods.
Payfast allows customers to pay via Instant EFT, credit card, debit card etc. Payfast doesn’t have a monthly fee and charges a percentage on each transaction, which is still much lower than that of PayPal.