Have you noticed it yet? You keep hearing about payment gateways from other online merchants. The term seems to be a hush-hush, and sounds like an exotic mumbo-jumboo jargon from some glib-talking finance guru you know practically nothing about . As far as the term is concerned, you are in the dark. But your friends chatter about it. And online businessmen speak praises for it.

To ease up your confusion, here are some important things about payment gateway.

1. A PAYMENT GATEWAY IS A SOFTWARE

It is a computer program built particularly for online shop owners. If you plan to put up an Internet based store, and you want browsing customers to purchase items from your site and then pay online using their credit cards, then you direly need this software. With it, your customers can pay for their purchases and will know whether their credit card payments are accepted or not.

2. A PAYMENT GATEWAY PROGRAM COMES BUNDLED WITH A SHOPPING CART

A shopping cart is a computer program for the exclusive use of online customers. With a shopping cart, customers can browse the many products displayed on your site, make the preferred selection-- color of the item, size, quantity, etc-- and then proceed to the virtual checkout counter where the shopping cart software adds up all the cost of the items chosen. It then adds the necessary shipping tax and other charges and then computes the total payment due. The shopping cart contains an online form where customers fill in with their credit card numbers and other pertinent customers' information.

3. A PAYMENT GATEWAY ENCRYPTS THE CARD INFORMATION SUBMITTED ONLINE

After the customer fills up the online form and clicks ? SEND?, payment gateway software encrypts the information and submits the data to the credit card processing company. The gateway then informs the customer whether his/her credit card transaction is accepted or denied with the appropriate return message. This whole process passes through a very secure connection.

4. A PAYMENT GATEWAY OFFERS MERCHANT BATCH PROCESSING

For example, fifteen customers browsed your online shop and bought one item each. At the end of the day, payment gateway gathers all these transactions that occurred in your site and then sends them all in one batch to your bank. In this way, your bank then collects payments from your customers and deposits them all in your account.

5. A PAYMENT GATEWAY INCLUDES AN EXCELLENT REPORTING TOOL

The payment gateway software includes a reporting tool where you can view all your online shop's transactions. You can then review these transactions, correct them, or store them in your PC. So you stay up-to-date with your online site.

6. A PAYMENT GATEWAY SCREENS FRAUDULENT CREDIT CARD TRANSACTIONS

With payment gateway, you need not worry about dishonest customers using fake, cloned, or stolen credit cards. It contains highly-effective screening tools that screens out these fraudulent transactions.

7. A PAYMENT GATEWAY OFFERS YOU VIRTUAL TERMINAL

Let take an example. Your old friend Sam calls you up and orders some items from you. He has no computer to key in his credit cards. With payment gateway virtual terminal, this problem is solved. All Sam need to do is provide you with his credit card information over the phone. Then you can manually enter this information into the payment gateway software. Sam gets the items he orders. You get the payments from his credit card. It's as simple as that.

Lastly, you can't just ? buy? this software. You have to subscribe to a company that offers payment gateway program. The good news is, there are many firms that offers this service. Take time to scrutinize each of them. Then pick one that meets your business style and your budget. Ciao!

( Kay Fione is an electronic banking authority with years of solid experience. She finished her Banking and Finance course as an honor student at the University of Minnesota. She currently works as an executive in an Australian bank. She loves snorkeling and writes business articles on her free time. Amber lives with her husband and four kids.)