I believe most of you heard of the words payment gateway but has little understanding of it. It is a merchant service provided by an e-commerce application service provider that authorizes the processing of credit cards or direct payments for e-businesses, online retailers, bricks and clicks or traditional brick and mortar. The payment gateway may be provided to its customers by a bank, but may be provided as a separate service by a specialized financial service provider, such as a payment service provider.

A payment gateway facilitates payment transactions by transferring information between the payment portal (such as a mobile phone, website or interactive voice response service) and the front end processor or by acquiring a bank.

How are they regulated over time?

Payment processes have evolved significantly over the last few decades, and with them, the regulations that govern them.

In the world of payment processing, treasurers and finance managers have benefited significantly from faster, more secure systems that have led to leaner and more progressive business processes. However, waves of regulation in financial markets have led to tighter and stricter procedures.

The fintech revolution, the digitalization of business processes and globalization have all helped banks and financial firms to address latency in business payment systems. At the same time, regulations such as the Second Payment Services Directive (PSD2) have set up frameworks for all firms to adjust. The Directive, which came into force at the beginning of 2016, aims to ensure that corporate treasuries optimize liquidity, increase visibility and prevent fraud.

With the arrival of faster payments, Swift GPI, as well as credit card companies like Visa offering compressive business solutions, has generally accepted that the entire architecture of the payment processing world will change irrevocably over the next three to five years. And the shift from tried and tested brick and mortar systems to pay-on-the-half (POBO) and cloud-based systems is much more driven.