Some of the payment gateways like Authorize net, Linkpoint, Veri sign, Flow pro etc work real time and the transaction also occur real time. Now what this means is that transaction can be completed or terminated that very time according to gateway authorization results? One does not need to wait for too long and is considered a very customer friendly process and the entire process is invisible to the customer. One just needs to wait and is not taken into any other sites and one click of button is more than enough for the entire transaction to take place. Another advantage of payment gateways is that it can tackle any kind of fraudulent techniques by asking for the customer’s zip code, address or asking the customer to write a certain variable to verify that the customer making the purchase is not a fraud. And all this happens real time, which provides protection to the customer as well as protects you.

The real time gateway requires Merchant account. A good thing about this is that the money is deposited directly into the bank account whether it takes place is batches or at one go but then it is a good thing that the money is transferred directly into your bank account and all this automatically without you doing much. Usually the set up cost is slightly on the higher side but then percentages and the transaction fees for these gateways are usually less and in the long run it is very beneficial even though the upfront cots might be slightly costly.

Now let us see how a payment gateway works. Now the customer clicks the buy button on your website and this request is then transferred to the payment gateway whichever the case is and then it contacts the bank in which the customer is holding an account to check whether he/she is the right person and if there is enough money in the account, if everything is good then the transaction continues and the money is moved into the merchant account and from there into your bank account. Incase the card is declined the entire process is moved back to the website where a message of declination of the card is informed to the customer, which is quite good to the customer since he/she come to know about it at that very time and can recheck if the information that they put was correct or not and if not then they can make the entry again.
Next we will talk about payment processors. Best examples of payment processors are Pay Pl standard, World pay, Verisign Pay flow link.etc. In a processor technique the transaction is a delayed process, it is usually completed on the website before the credit card is authorized i.e. the customer is informed that the transaction has been completed even though the credit card has not been authorized. Now what happens is that the after the customer clicks on the buy button he/she is diverted to the website of the processor .The disadvantage of this is that you might loose your unique branding since the customer is now into the other site and it breaks the flow. Now the problem also arises when the credit card is declined, because for the credit card to get authorized it might take one hour to maybe even one day, for a customer the transaction is complete once they click on the buy button and get a thank you message but then if the credit card is declined and then getting back to the customer after a day or so when the customer might be expecting the product to arrive is certainly not the right thing to do and this might make you loose that customer which certainly is not at all good for your business. Usually a payment processor do not require merchant account which in some way is an advantage for you and neither do you have to spend much on set up but the percentage and the transaction fees is quite high on this and if your website gets a large amount of traffic on a daily basis then it might be an expensive affair for you even though the upfront cost might be less.
Now let us check out how does a payment processor takes place. First of all the customer clicks on buy button and a thank you message is sent to them. For the customer the transaction is over and they have bought the product. But what actually happens in the background is that the information is sent to the payment processor and the entire process might take a few minutes or maybe even a day. And then the yes or no is sent to the merchant through a “Post Back” page and if the card has been declined then the onus is on the merchant to inform the customer that the card has been declined. So by now I am sure which process has more advantages.