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Do you have to deal with chargebacks constantly in your e business? You can greatly reduce the number of chargebacks by making use of a payment gateway.

Chargebacks are some of the most damaging costs that any e commerce related business can experience. But these costs can be mitigated to acceptable levels by making use of a payment gateway.

Definition If you are new to e commerce, it will do you more good than harm to invest some term to familiarize yourself with the common used in e commerce. Here I will define one such term for you. The term is Payment Gateway.This is simply a service which allows an online merchant - owner of an e commerce business- to have credit cards processed by a processor. The processor can be either a bank or non-bank.

How does the system work?You can think of it as the physical point where you make payment - cashier point - in a conventional store. You enter into a conventional store, pick whatever you want and put it in a shopping cart and then pay for it on your way out.

E business use the same concept, only that theirs is virtue. That means instead of the physical cart, a payment gateway provides one in the form a computer program. The program allows you to pick things from an e business website by adding them to a "shopping cart".

Once you are through adding items to your cart, you complete the transaction by paying with your credit card. This usually involves swapping or keying in your credit card details on a terminal.

Processing the information

When the information is entered, it triggers a sequence of processes which you have probably never thought of. You credit card details are entered in an online form.

The information is sent to the processing firm. The firm processes the information and relays it back to the e business website for action.

Transaction Authentication The gateway service carries out a background check to authenticate the transactor. Some of the information that is authenticated by the payment gateway includes:

Address verification; the system matches the address information captured on the form, street address and zip code and matches it with the information provided by bank which issued the card.SAAS chargebacks

CVV2; this is a series of numbers printed at the back of major credit cards. Discover, Visa and Matercard have 3 numbers while American Express credit cards have a 4 code digit.