A payment gateway is an essential e-commerce service that securely processes transactions between merchants and customers, protecting sensitive information through encryption. The document outlines the two main types of payment gateways—hosted and shared—along with their respective processes, security measures such as SSL and SET protocols, and the advantages and disadvantages of using payment gateways. It emphasizes the importance of a secure system for processing online payments to protect users' personal information.

1. PAYMENT GATEWAY
• Presented by SHUJA ASHRAF SHAH
• ENROLL: 4471
• 7TH SEM CSE

2. INTRODUCTION
A Payment Gateway is an e-commerce application service provider that authorizes
payments for e-business, online retailers etc.
The gateway itself is simply a secure online link between the merchant and the customer’s
bank. Sensitive information, such as credit card numbers, needs to be protected from
fraudulent parties.
Payment gateways encrypt the sensitive information such as credit card details to ensure
that the information passes securely between the customer and the merchant.

3. Steps Involved
Buyer initiates the purchase.
Site Collects the buyer Info.
Buyer is sent to Payment Gateway.
Payment Gateway Collects the Credit Card Info.
Payment Gateway handles the transaction.
Payment Gateway verifies the purchase.

4. PRELIMINARIES
Online Customer: Entity who browses the e-commerce website and who will buy he products by
making timely payments.
Merchant: A merchant is the seller who will receive the payments made by the customer.
Banks: there are two types of banks
1. Client Bank : It holds the clients account and validates the customer.
2. Merchant Bank : It holds Merchants account and is responsible for management and fraud control
etc.
Payment Gateway : A payment gateway is connected to all the customers, merchants & banks
through internet and is responsible for speed, reliability and security of all transactions that take
place.

5. Framework Overview:
Payment gateway
Online
Customer
Client Bank
Merchant BankMerchant

6. Categories of Payment Gateways:
There are mainly two categories of Payment Gateways :
1) Hosted Payment Gateways
2) Shared Payment Gateways
Hosted Payment Gateways:
• Hosted Payment Gateways are those that direct your user away from your
ecommerce website.
• While making payments, the customer is redirected to the real gateway page by
clicking the gateway link.This leaves merchants website for some time before
returning back.
• The benefit of these gateways is that you do not need a Merchant ID since no
confidential details are needed from your website. Examples here include PayPal,
WorldPay and Nochex.

7. Categories (cntd…)
Shared Payment Gateway:
• While making the payments, a customer is directed to the payment page
and not out of merchants website.
• Here, a Post form is used once one clicks on a payment link/button.
• The payment page is maintained securely by the payment gateway.
• After all details about credit card and other required fields are complete, the
user fully gets back to the main website.
• The main benefit is that one does not get away from your website thus fast
and easy to use. Example of a gateway is eWay.

8. Security
Is your money in safe hands?
• Buying stuff online is easy, saves time and money, however there’s a risk
involved.
• Each time we pay for something, we input our credit/debit card details to a
third party (other than our bank). And considering the virtuality
of online medium and the risks associated with it, there’s always a sense of
fear for online fraud.
• The e-commerce platforms and banks tend to maintain a robust framework
to securely carry out the transactions for the goods and services we pay for.

9. Security (cntd…)
Data Encryption:
• Data encryption is one of the main security method used in payment gateways.
• Once you enter your card details in the payment gateway, it gets encrypted by
using payment gateway’s public key and can only be decrypted by the payment
gateway’s private key.
• The gateway uses an algorithm which makes sure that no unauthorized party can
decrypt the encrypted data when being transmitted through the network.
• These algorithms usually follow symmetric (same key for encryption and
decryption) or asymmetric (different key for encryption and decryption)
cryptography to mask data so that unauthorised sources are unable to read or
intercept it.

10. Security (cntd…)
Secure Socket Layer (SSL):
• Secure Socket Layer (SSL) is the standard security protocol used in online
transactions to establish an encrypted link between a web server (where the
payment is taken) and a browser (where the payment information is entered).
• E-commerce websites uses SSL to authenticate their identity to the visiting
customers and to protect sensitive information such as card details entered by the
customers.
• It is advisable to make an online transaction on websites which have SSL
certification.You can check out the same for a website by noting the https prefix in
the URL address of the website in the browser and by locating the Padlock symbol
in the web browser.

11. Security (cntd…)
Secure ElectronicTransaction (SET)
• Developed byVisa and MasterCard, the Secure ElectronicTransaction (SET)
protocol is used to aid the secure transmission of customer’s credit/debit
card details during online transactions.
• The protocol blocks out the details of credit card information, thus
preventing merchants, hackers and unauthorized parties from accessing the
sensitive information.
• SET uses Dual Signature to link two messages that are intended for two
different receipients.
• SET uses customer digital signatures to maintain confidentiality,
authentication and data integrity.

12. Types of Payment Gateways
PayPal
2Checkout.com
Amazon Payment
Google Checkouts
Securepay.com
Authorize.net
PayUmoney
PaySimple

13. Features of Payment Gateways
Transaction & Network Security
Secure with latest security technologies like SSL
Fraud Screening features
Reduces risk of theft and loss
User friendly And speedy in processing
Support for multiple forms of Payment
Time Saving
Ease of use

14. Disadvantages of Payment Gateways
Payment gateways highly depend on internet connectivity
Lack of Anonymity
Risk of being hacked
Fees

15. Conclusion
The rise of e-Commerce has led to the development of sophisticated
payment gateways that can be integrated seamlessly with your website
without the need for specialized coding knowledge.
Payment gateways not only perform the basic function of processing credit
card transactions over the web, but also bring a host of security and fraud
prevention features that protect both merchants & customers.
The key to taking Payments online is to have a secure system that doesn’t
compromise the customers personal information.
Payment Gateway acts as an interface between online website and the
bank.