One integral part of any online business is its payment system. Regardless of the industry a company falls under, the services being rendered, and the number of customers being served, no business will succeed without a secure and reliable payment gateway for customers to carry out online payments.
As you know, cash payment methods are fast fading in the 21st century. This causes a heightened need for most brands or businesses to adopt digital payment channels. However, many of these channels are out there, so choosing the best one can be challenging.
If you own a business, the only way to know the most suitable payment platform for the kind of goods or services you provide is to understand payment gateway architecture and how it works.
That way, you can decipher how payment systems work and ultimately select the best payment platform for you or your business. Keep reading to find out more!
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A payment gateway is a platform that allows users to make online payments for goods and services. With these platforms, it's easier for your customers to send payments through electronic channels so you can then receive the money in your bank account.
Before we dive deeper into the working processes of a payment gateway, certain things come together to make online payments possible that you should know. They include:
These five things are an integral part of any payment gateway. Now, to how it all works with our software.
Now you know the various things that make the internal workings of any payment gateway, here's how they all work together:
A customer places an order on the merchant website (or any website at all that accepts online payments) for certain goods/services
The customer's payment request is sent to the payment gateway for processing
The payment gateway collects every information required to process the payment from the customer. Such information includes credit or debit card details, transaction details, customer names, etc. All this data is then stored in secured servers
The payment system encrypts all the data, converting it to secret code, and then sends it to the acquiring bank (merchant's bank).
The acquiring bank receives the data as codes, decodes it, and now sends the payment details and an authorization request to the card schemes. In this step, one of two things can happen: either the request is approved or not.
If the request is approved, it is processed through the issuing bank again.
If the request is not approved, the card schemes send back a message to the acquiring bank showing that the payment wasn't approved. For example, you may see a "card declined" or "transaction failed" error message. The card schemes also explain the reason why the payment failed.
If everything works out fine, the issuing bank sends a message to the payment gateway that the transaction is successful.
The payment gateway notifies the customer that the payment was successful or declined, as the case may be.
Payment gateway architecture is quite complex, but still, all these things are done in a matter of a few seconds to give you the optimum payment experience.
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Online payment platforms make the magic of instant payment processing possible for merchants and customers. Neither party has to do any work (like going to banks to fill deposit slips), but everything is handled by the financial institution and the payment service provider.
An online payment gateway allows customers to make secure payment transactions. The various protocols set up in payment gateways make it difficult for any malicious activity to be done.
Even if complications arise during payments and the money doesn't get to the merchant, these issues can be easily traced and rectified.
A perfect payment gateway doesn't just provide a platform for secure payments and gives customers multiple payment options for the merchant's services. This helps improve convenience.
When payments can be done in a matter of seconds, customers won't have time to second-guess their choices. Payment gateways make payment safe, easy, and convenient, so people won't mind paying or buying multiple times, as they know their money is secure.
However, if customers encounter prolonged speeds during online transactions due to the payment system, they'll be very reluctant to buy stuff next time. This is another reason why companies must select a gateway with the perfect payment platform architecture so customers get the best experience when paying for goods and services.
Having learned the importance of payment gateways and payment platform architecture, let's see some things you should look out for when trying to select the right one for your business.
Distributed systems can process thousands of digital payments daily, offering unparalleled performance and flexibility. These systems utilize the actor model (where code components are treated as actors that can send messages and react with each other) and distributed databases that allow for data storage in multiple nodes. With this, nothing can go wrong in the internal services of the system.
It goes without saying that any good payment gateway should provide high data security. Whether its a new system or an old system for payments, the following boxes should be checked as regards security:
The best payment platforms are those that allow people to pay again and again, as much as is necessary. Platforms like these usually feature horizontal scaling, so there'll be high availability (24/7 payments) and low latency regardless of the workload.
A payment gateway with reactive architecture uses reactive principles to handle sudden activity spikes on the platform efficiently. Top payment gateways use this sort of setup. It provides the needed support for the system in case of sudden overload.
Top platforms like Bonsai also feature a Service Oriented Architecture (SOA Model), which massively reduces customer charges and improves response times.
If you're looking for a payments system that checks all the boxes and has a perfect payment platform architecture, then we recommend Bonsai Payments. From security to flexibility and speed, Bonsai makes processing payment transactions a seamless experience for both merchant and customer.
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?