What is a 2D Payment Gateway?

What is a 2D Payment Gateway?

By Victor Fine Technologies, 11 June 2024

East Africa is experiencing a digital revolution, from mobile banking to e-commerce, with technology adoption growing rapidly. A key player in this transformation is the 2D (two-dimensional) payment gateway. But what exactly is it, and why is it vital for the region? Let’s explore.

Understanding a 2D Payment Gateway

A 2D payment gateway is a system that processes payments by verifying card information on two levels before authorization. Customers input essential card details such as the card number, expiration date, and CVV (Card Verification Value) provided by their card issuer.

2D vs. 3D Payment Gateways

There are two main types of payment gateways: 2D and 3D (three-dimensional). Here’s how they differ:

2D Payment Gateways:

• Basic Card Details: Require only the card number, expiration date, and CVV.
• No Additional Authentication: Do not require extra layers of authentication beyond basic card details.
• Higher Fraud Risk: More susceptible to fraud due to the lack of additional security measures.

3D Payment Gateways:

• Enhanced Security: Add an extra layer of security by requiring additional authentication from the cardholder.
• Authentication Step: Users are redirected to the card issuer’s website to enter a password, OTP (One-Time Password), or use biometric verification.
• Reduced Fraud Risk: The extra authentication significantly lowers the risk of fraud.

How 2D Payment Gateways Work

The process of using a 2D payment gateway is straightforward:

1. Customer Checkout: Customers select their payment method during checkout.
2. Payment Information: Customers enter their card details into the payment gateway interface.
3. Transaction Processing: The gateway sends card details to the acquiring bank, which communicates with the issuing bank for authorization.
4. Payment Confirmation: Once authorized, both the customer and the merchant are notified of the completed payment.
5. Order Fulfillment: The merchant delivers the goods or services to the customer.

Benefits of Using a 2D Payment Gateway

1. Simplified Checkout Process: Customers enjoy a seamless checkout experience without being redirected to external pages, leading to quicker transactions and higher satisfaction.
2. Increased Conversion Rates: By reducing distractions and friction, 2D payment gateways lower cart abandonment rates and encourage customers to complete purchases.
3. Broader Accessibility for International Transactions: Supporting multiple currencies and payment methods, 2D gateways cater to a global audience, enhancing the shopping experience for international customers and driving sales growth.
4. Security and Fraud Prevention Measures: While 2D gateways are less secure than 3D, they still employ advanced encryption and tokenization technologies to protect sensitive information and use real-time fraud detection algorithms to enhance security.
5. Cost-Effectiveness and Convenience: With competitive pricing and straightforward integration, 2D gateways are cost-effective and convenient for merchants, allowing them to focus on growth and delivering exceptional customer experiences.