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Payment Gateway and NetBill

Prepared by : Anubha




Payment Gateway

Terms which are related to payment gateway


Flow of payment process


Working of payment gateway




Examples of Payment Gateways


Gateway advantages


Gateway disadvantages


API Certificate

Net bill




main features


Steps involved




Payment Gateway

What is Payment Gateway?

A payment gateway is an e-commerce application
service provider service that authorizes payments for ebusinesses(ex: online shopping carts)
Before going to the payment gateways first we need to
know the following terms.

Terms which are related to

payment gateway
1. E-commerce
2. Web services
3. Payment Process


Electronic Commerce , commonly known as

eCommerce , consists of the buying and selling of
products or services over electronic systems such
as the Internet and other computer networks.

Web service

A Web service is defined by the W3C as "a

interoperable machine-to-machine interaction
over a network.
For accessing every web service we need an
API(Application Program Interface) key.
Web service is a platform independent.

Payment process

A payment process is nothing but an

transaction of money between the
users and merchant (owner of the
In payment process we need
2 types of accounts.
1. Business Account (user)
2. Merchant Account (owner)

Online Shopping Example

The Payment Gateway Workflow should
be inserted before the checkout.
After the confirm order, page will the
payment gateway workflow be activated

Flow of payment process

Working of payment gateway

Visitor places the order on the website and it is sent

to the merchant's web server in encrypted format.
This is usually done via SSL (Secure Socket Layer)
encryption. Content organization
The transactions details are then forwarded to the
concerned Payment Gateway.
The transaction information is then passed on to the
merchants acquiring bank by the Payment Gateway.
Merchants acquiring bank then forwards the
transaction information to the issuing bank (one that
issued the credit card to the customer).

Then the card issuing bank sends a response back to

the Payment Gateway. The response includes
information that whether the payment has been
approved or declined. In case of declination the reason
is also sent in the response.
The response is then forwarded by the Payment
Gateway to the merchants server.
At merchants server the response is encrypted again
and is relayed back to the customer. This allows the
customer to know that whether the order has been
placed successfully or not.
The entire process typically takes less than 5 seconds.

What is SSL?

SSL stands for Secure Socket Layer

Payment Gateways encrypt sensitive
numbers, to ensure that information
passes securely between the customer
and the merchant.
SSL used HTTPS protocol.

Examples of Payment

PayPal (Global)
Authorize. Net (US)
VeriSign (Global)
Link point (US)
2Checkout (Global)
World Pay (Global)
Cyber Source (US)
Protx (UK)
EWay (AU)
Moneris (CA)
QuickBooks Merchant Services (US Only)

Types of credit cards

Gateway advantages

Gateways can provide many benefits, with its main benefit

being security. We recommend to all our customers that
they use a payment gateway to handle all credit card
payments. While VP-ASP does provide credit card number
encryption and can ensure that the software is secure, it is
still stored in a location that a hacker may be able to
access. Whereas, when using a payment gateway, the
credit card information is sent directly to the bank for
verification and therefore no credit card details are stored.

In addition to security, payment gateways also provide the

following benefits:

Credit card validation and processing in real time

Less fraud (but there are many stolen credit card numbers
floating around)

Money is normally deposited into your bank account


Gateway disadvantages

Every gateway company charges fees. Fees

can include some or all of the following:
Fixed fee per month
Percentage fee per amount spent
A fixed fee per transaction
In addition your own bank or the gateway's
bank will charge a merchant fee for the
privilege of allowing credit card purchases.
This can range from 1-5% or more.

API Certificate

Save the values for API Username and

Click the Download Certificate button. You
are prompted to download a file called
cert_key_pem.txt. This file is your live API
Rename this file to something more familiar,
such as paypal_live_cert.pem. It is not
necessary to keep the .txt file extension. Be
sure to remember where you save the file.

Net bill
(A type of payment gateway)

Net bill

This type of payment gateway is useful

for purchasing digital goods & services.

Micro-payment for information


Micro-payment is a small payment of fractions of a

rupee or a dollar when 'information goods' are
delivered via the internet. By information goods we
mean music files, video entertainment or text files
(for example, works of fiction, software, technical
A system to collect micro payment should have low
transaction cost.
One such system is NetBill.
NetBill is implemented by Carnegie Mellon
University, Pittsburg, USA, in cooperation with Mellon
Bank Corporation, Pittsburg.

The main features of this payment system


1. The customer is charged only after the

information is delivered.
2. The vendor is guaranteed payment when
the information is delivered.
3. The customer deposits an amount which is
debited when information is delivered to him.

The payment system has nine steps

described as under

Step 1: A customer requests a

quote for 'information goods'
from a vendor.
Step 2: Vendor sends a quote
to the customer.
Step 3: The customer accepts
the quote and notifies the
vendor of acceptance.
Step 4: The vendor encrypts
the information and sends it
to the customer (note that the
customer will require the key
to decrypt the information).

Step 5: The customer sends a digitally signed payment order

to the vendor consisting of the check sum of encrypted
information received and the amount to be paid.
Step 6: The vendor verifies the payment order. If OK the key
to decrypt the information, along with the payment order is
digitally signed and sent to the NetBill's server by the vendor.
Step 7: The Net Bill's server checks the customer's credit
balance. If it is sufficient it debits his account based on the
payment order. It credits the vendor's suspense account and
sends an OK to the vendor.
Step 8: The Net Bill server sends the decryption key to the
customer to enable him to decrypt the information received
from the vendor.
Step 9. When the amount due to the vendor is substantial it
is credited to his account by Net Bill.

The advantages of this system are :

Ensures all transactions are
completely successful.
Maintains both merchant & customer
Goods are delivered in encrypted form on
consumers machine.


"eCommerce: Payment Gateways". digitalbusiness.gov.au. Retrieved 20 November 2012.

Jump up ^ Gulati, Ved Prakash. "The Empowered Internet Payment Gateway" (PDF).
Computer Society of India. Retrieved 22 May 2013.
Jump up ^ "eCommerce: Choosing your payment methods". digitalbusiness.gov.au. Retrieved
19 November 2012.
SET Secure Electronic Transaction Specification, Programmers Guide (1997), Version 1.0.
Available at
Whitworth MJ (1999), Yes.Gate - Technical Description; Version 1.0: (Thyron Informatics (P)
Technologies for e-Commerce (2001); Center of Excellence for e-Commerce, CMC Ltd.
Keyes Jessica (1998), Banking Technology Handbook, CRC
Shaw. M.J. (200) Electronic Commerce: State of the Art (2000)
M. Shaw, R. Blanning, A. Whinston. Handbook on Electronic Commerce
www.transecute.com, Accessed December, 2006
www.ccavenue.com, Accessed December, 2006
www.isabel.be, Accessed December, 2006
www.nets.com.sg, Accessed December, 2006
www.payseal.com, Accessed December, 2006