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What is a Payment Gateway and Aggregator – License, and How Does It Work?

hernycruise May 12, 2021

A payment gateway is a financial service that monitors credit cards and other forms of payment (like debit card, credit card, net-banking and payment through your e-wallet, etc.) Payment gateways are software and servers that send transaction information to acquiring banks and respond to responses from issuing banks. Payment gateways, in general, allow banks to communicate with one another.

The payment gateway license from rbi serves as a middleman between the website and the banks, allowing transaction details to be communicated more easily. It gathers information from the buyer bank and sends it to the receiving bank, noting whether the transaction was accepted or declined.

Furthermore, online payment of bills, recharges, and other services has become commonplace. When we buy something online or pay a bill, we are taken to a new page when we click “pay now.” This is the website’s payment portal platform, where we make payments for products and services.

Furthermore, online payment of bills, recharges, and other services has become commonplace. When we buy something online or pay a bill, we are taken to a new page when we click “pay now.” This is the website’s payment portal platform, where we make payments for products and services.

Payment Gateway License Benefits

The following are the benefits of having a payment gateway license in India:

  • Wallet for PCI-DSS

By protecting users’ information in the gateway or portal for bill payment, PCI-DSS Wallet enforcement provides protection to users. For example, a daily Amazon customer can save his or her bank account information on Amazon’s app or website, and the gateway protects it from any cybersecurity threats.

  • Wallet with White Label

Customers may use mobile wallet apps to make digital transactions with certain payment gateways. This is the most recent trend, as it allows users to perform all of their tasks in one location. The money can be transferred from a bank account to a mobile wallet app, which can then be used to make purchases on other mobile apps or websites.

  • Tools for Detecting Fraud

Some Payment Gateways provide FST (Fraud Screening Tools) to their customers in order to reduce the risk of data loss. CCV (Card Code Value), CVV (Card Verification Value), and AVS are examples of these methods (Address Verification Service). The primary goal of these tools is to ensure that no transactions are fraudulent. Another important benefit of a payment gateway is that it enables many users to transact at the same time. This makes it possible for a customer to buy or sell products and services whenever he or she desires.

What is a Payment Gateway and How Does It Work?

The Payment Gateway performs a series of tasks after a customer places an order on an online portal, which are discussed below:

  • The use of encryption:

The data that must be sent to the vendor’s server is encrypted by the customer’s browser. The transaction data is then sent to the payment processor by the payment gateway.

  • Request for Authorization:

After receiving the data, the payment processor sends it to the card organization. At this point, the bank that issued the card checks the transaction and either rejects or approves it.

  •  Order Fulfillment:

If the Bank approves the transaction, the authorization for the customer and merchant is forwarded to the Payment Gateway’s processor. After receiving a response from the processor, the information is sent to the website for payment processing. This is how the data is processed and the payment is made. The whole payment procedure takes just a few seconds.

Documents Required for Application Submission

  • Status of the applicant
  • Proof of the registered office
  • Certificate of Incorporation (Certificate of Incorporation)
  • A Concise report on the company’s main operations.
  • detailed information on the company’s management
  • Audit report legally required
  • Balance sheet that has recently been audited
  • Names and addresses of the company’s bankers
  • Process flow, technology, security features, and all detailed in the payment system.
  • Benefits to the Indian financial system anticipated from the proposed company capital sum
  • Funding sources
  • Any other details that the RBI needs

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