How does Payment Gateway work in India?

How does Payment Gateway work in India?

If you’re an online business owner and set up your items to be displayed on the internet, choosing the right Payment Gateway is crucial. When the products purchased have been added to an online shopping cart, the buyer can then checkout. This is where the function of the Payment Gateway comes into play. It allows the merchant’s site to solicit payment from the payment method. After the payment is accepted, it will be transferred securely from the purchaser to the vendor. Let’s now look at how the Payment Gateway operates.

What is the function of a Payment Gateway?

A Payment Gateway plays an essential role in each online transaction across the globe. It is responsible for approving transactions between customers and merchants.

Let’s look a bit deeper into what happens in the checkout process –

1. After the customer has confirmed the purchase and chooses one of the options for payment, the browser secures the payment details and then sends information to the merchant’s site. This encryption takes place via Secure Socket Layer (SSL). To do this, the merchant has to become SSL certified. The merchant’s website transfers the encrypted information via the Payment Gateway.

2. The chosen merchant’s payment processor takes the lead from now on.

3. This Payment Gateway relays the encrypted data to the merchant’s bank.

4. If the mode of payment chosen by the user is a credit or debit card or any other e-wallet, the bank will forward the encrypted data to the association, which then forwards it to the bank that issued the card.

5. If the preferred payment method involves net banking or UPI payment, the encrypted information is transmitted directly to the bank’s servers and then to the customer.

6. The bank that the customer is with scrutinizes the account of the customer in order to determine the amount of funds, as well as other criteria such as CVV or Pin match, limitations established by the customer, etc.

7. After a thorough review, the customer’s bank can approve the transaction if the transaction meets all required protocols. If there’s unsatisfactory data or a lack of funds for the purchase, it will be rejected.

8. The response is then codified and returned via the Payment Gateway.

9. The Payment Gateway then forwards this response to the merchant, accepting or rejecting the transaction.

What’s the most important thing about a Secure Payment Gateway?

The entire process must be quick and efficient and demands effective coordination between all involved parties. The efficiency of the Payment Gateway comes to the forefront in this regard. A solid Payment Gateway like OnionPay, working with optimum speed, will be able to finish this entire process within a matter of seconds.

The job of a payment Gateway doesn’t end there. At this point, the condition of the transaction, whether it was approved or rejected, is decided. The merchant is still being paid. In this case, the second phase of the payment gateway’s process begins.

1. When they have received approval, the merchant will send the approval code to their banking institution using their Payment Gateway.

2. The merchant’s bank transfers the sanctioned sum into the account of the merchant vendor or the account of all merchants in the Payment Gateway.

3. The final payment is transferred to the company’s banking account via the merchant account.

What to know about the merchant account?

The necessity of a merchant account is double-sided. It is a protection for both business customers and credit card businesses. It keeps the money in a safe place during a time of transition until the purchase is made to the client’s complete satisfaction. If there are any problems in the order made via e-commerce and the client does not receive a refund via their merchant accounts.

The seller has a choice to get a merchant account or opt for the aggregated account offered through Payment Gateway. Payment Gateway. The choice is made based on the cost aspects involved and the time frame for cash flow in each instance.

What Are Payment Gateways Regulations in India?

The owner of the business must know the way Payment Gateway works in India. RBI guidelines regulate the functioning that operates Payment Gateways. In a circular issued on 17 March 2020, RBI has released the guidelines regarding how to regulate Payment Aggregators as well as Pay Gateways that you can check out later.

What is the ideal Method for a Payment Gateway Option?

The choice of the Payment Gateway is also dependent on how it will be integrated into the merchant’s site. Software developers usually perform this function for merchants. Working knowledge of PHP, Java, or C# coding is essential to performing this task. The way a Payment Gateway functions in PHP and how it functions with Java, as well as C#, needs to be thoroughly tested before going live.

There is also ready-made software available to allow merchants to integrate their Payment Gateway to their own website without the need for coding. OnionPay is an India payment aggregator that offers the services of a Payment Gateway with the best rate of success. Owned and operated by Zhudao infotech private limited, OnionPay has an extensive customer base of happy customers. One of the most important benefits of working in partnership with OnionPay is –

  • OnionPay offers multiple payment options to your customers.
  • OnionPay ensures fast and simple-to-use transactions.
  • OnionPay provides extreme safety and top-of-the-line security.


With the strong push toward digitalization, businesses are now aware of the importance of having an online presence. There are a lot of businesses that are only available online. Selecting the appropriate Payment Gateway is critical to the success of an online business. Merchants should read these tips carefully and make an informed business decision.