Payment Gateway On cloud


Payment gateway is a consumer facing interfaces, used by merchants to provide multiple channels for payment.

Collection -> authentication -> Authorization -> Settlement

  • From e-commerce site, payment processing checkout portals, use of APIs, secured web services

  • ATM networks

  • Mobile wallet integration (ONUS/OFFUS). Ability to interact with mobile wallet through social networking channels, eliminates the need to install special application on your devices.

  • Web site (3D secure/Payment capture)

  • Social channels like Facebook/Google+ using XMPP integration, highly secured and works over SSL

    • For more details visit - http://telecom.ashishbanerjee.com/social-commerce

  • Pay by link - Merchants can generate this payment link through their payment service provider’s back-office and then send it to customers via various channels (SMS or email) .

    • In essence, when customers click on that link, they’re redirected to a secure payment page where the payment amount is predefined,

    • Customer only need to enter their card details to complete the transaction.

    • This simplifies the payment process for your customers,

    • Requiring zero to very little development or integration work on the merchant’s end.

  • Traditional brick and mortar retail stores (use POS - point of sales terminal, connect payment processing n/w using either a phone line or an internet connection)

    • Brick and mortar payment gateways now a days begun accepting phone based payments based on NFC( Near Field Communication)

Other functions performed by Payment Gateway

  • Payment gateway also server few other functions

    • Screening orders

    • calculating tax costs

    • use geolocation for location specific actions

    • Chargeback protection

    • Invoice Generation

  • Popular gateways - paypal, stripe, square

    • PayPal - Payflow Gateway, adds fraud prevention security

    • Stripe - Large volume of transactions

      • mobile ecommerce

      • SaaS

      • non-profits

      • platform based payments

    • ApplePay - mobile payment structure, use faceID, touchID for -payments for customers using electronic "wallets"

    • AmazonPay - 300+ million customer base

    • Square - physical card processor, payment gateway provider - flexible mobile payments for retail business, in-person transactions

    • Square reader technology - Attach a small piece of hardware to mobile phone

      • customer swipe their payment card for processing through the mobile phone's electronic connection

      • Square reader sends payment information to merchants acquiring bank

      • Bank process the information for the merchant momentarily

    • Payment can be accepted at ad-hoc locations

      • conventions

      • farmer's market

      • roaming storefronts- such as food trucks

Security in Payment Gateway

For cloud based payment gateway, data encryption can be done in order to ensure secure transmission of data, just like POS device.

Agreement with cloud service provider to provide additional security of data to ensure regulatory compliance- AWS is PCI DSS compliant.

  • Encryption b/w user browser and the server of retailer. A payment gateway will encrypt data (AES-256 algorithm)

    • Use of SSL/TLS termination in browser

    • Secure electronic transaction (SET) protocol - uses customers digital signature to maintain confidentiality, authentication and data integrity

    • Decrypt and encrypt Internet packet to ensure the security of online transactions

  • Ensure PCI DSS compliance

  • Request - Authorize request occur when payment processor get approval from financial institution to proceed with transaction

  • Fulfillment of request after authorization using secure channel

Benefits of cloud based payment model

  • Capability can increase manifold

  • With proper implementation, telecom CSP will be a single point of contact for customers for wide range of services

  • Since most of the computations are done on cloud, even a basic/small handheld device could be used for many types of transactions

  • Cost benefits -CAPEX to OPEX

  • Performance benefits - shared utilization of resources

  • Pay-as-you-go by cloud provider , beneficial for telcos

  • For telcos, payment reconciliation is mandatory part - data sharing b/w telcos and financial institution could be simplified, lead to real time reconciliation

    • Faster reconciliation -> faster realization

  • For any discrepancy, discussion could happen in real time b/w concerned team and payments team

  • Location based disaster recovery not relevant

  • Financial reporting on off peak hours

  • Sharing of resources with management will be easier

  • Auto debit of payments can be scheduled at off peak hours

  • Fraud screening can be done regularly using during off peak hours

  • Close to real time fraud screening reports could be generated

  • Semantic web can be used to generate reports for management to analyze customer trends

  • VAS is directly proportional to convenience of customer

  • Operator billing, NFC

    • NFC cloud wallet

      • Works with NFC enabled chip and PIN POS

      • Suggests working with popular financial institutions such as MasterCard and Visa

      • Authentication is processed by a secure chip such as NFC microcontroller, etc. in a handset

      • Payment application is deleted from the NFC handset once the Cloud is updated – more secure and saves memory

      • For more details refer - https://infonomics-society.org/wp-content/uploads/jitst/published-papers/volume-2-2013/Cloud-based-NFC-Mobile-Payments1.pdf

Payment Gateway vs Payment Processor

Payment processor :

  • Analyses and transmits transaction data

  • transmits relevant information to an issuing bank

  • example credit/debit card number links to bank account

  • Its the step in the process of payment

  • Can include both digital and hardware component or can handle processing through s/w only

Payment Gateway :

  • authorizes the transfer of funds b/w buyer and seller

  • All of the above payment processor steps

  • Its a metaphorical cash register

3 Types of Payment Gateways

1. Redirect:

  • Might include an option for a paypal payment

  • When a gateway takes a customer to a paypal payment page to handle the complete transaction (processing and paying) it becomes redirect

  • Simplicity for retailer

  • cons -less control for the merchant and second step for customer

Check out on site , payment off-site

Stripe - the front end checkout occur on your site, but payment processing happens on through stripe's backend.

  • Provide simplicity

  • You won't have control over customer's entire experience with gateway.

On-site payments

Large scale businesses use on-site payments, handled completely on their servers.

Back end channels used by payment gateway

  • SWIFT - international money and securities transfer

  • ACH (Automated Clearing House)

  • Payment Networks (Master/Visa/Amex)

  • Direct Bank Integration

  • Mobile Wallet Integration (ONUS/OFFUS)

Functional modules

  • High Velocity Payment Switch - dynamic routing, fraud management, extension of payment n/w , security

  • Accounting & Reconciliation Hub - foreign currency, multiple company and supplier account, bank reconciliation

  • Payment Hub - http://www.icommercecentral.com/open-access/defining-a-payment-services-hub.php?aid=38159

  • Fraud Management (Online, Offline)

  • Compliance (KYC, AML/CFT)

  • Audit & Control

  • B2B Partner Management - integrate payment gateway directly on the website

    1. Virtual terminal

    2. Online payment portal

    3. ACH

    4. Debit/Credit cards

  • Service Governance & Business Rules & Policy Management

  • Exceptions & Business Process Management

https://www.researchgate.net/publication/228280377_Online_Payment_Gateways_Used_to_Facilitate_E-Commerce_Transactions_and_Improve_Risk_Management

Webhook to callback the merchant once the payment succeeds.


Payment aggregator accumulates the client’s funds (hence the name “aggregator”), i.e. It has the status of a non-bank credit organization.

Payment gateway only routes the payment, and does not interact with the money of the online store, being a technological intermediary in making the payment. Depending on this, the risks incurred by the client and the size of the fees differ.