Skip to content

Commit

Permalink
reduce "What?" section to make intro tighter #1
Browse files Browse the repository at this point in the history
  • Loading branch information
@nelsonic
nelsonic committed Dec 30, 2022
1 parent 898ffc5 commit 809708b
Showing 1 changed file with 51 additions and 94 deletions.
145 changes: 51 additions & 94 deletions README.md
View file
Original file line number Diff line number Diff line change
Expand Up @@ -15,146 +15,103 @@ and how you can add it to your application!
# Why? 🤷

Sadly, not all applications can be "free";
The software engineers that build them need to be paid
and the servers that host them aren't free either.
the software engineers that build them need to be paid
and the underlying infrastructure costs money too.
Many Apps cover their costs through advertising.
But this is selling the "users" data,
which we are not fans of ...

> "_When something online is free,
> you're not the customer,
> you're the product._"
> ~ [Jonathan Zittrain](https://blogs.harvard.edu/futureoftheinternet/2012/03/21/meme-patrol-when-something-online-is-free-youre-not-the-customer-youre-the-product/)
Some apps are sold via **one time purchase**.
Others are subscription-based.
Others are **subscription-based**.
Regardless of the type,
all of these share one thing in common:
**they use payment processing gateways
to collect funds**.

In any current application,
knowing how processing payments work
and how they can be implemented
is important,
as it affects the bottom-line
of the project/application/company.

# What 💭

Consider what happens
when we purchase something online.
Assume we want to buy a product online
e.g:
[Postico2](https://eggerapps.at/postico2/),
a PostgreSQL database editor.

<img width="1214" alt="buy-1" src="https://user-images.githubusercontent.com/17494745/209847803-5fae9197-afed-46c3-9746-5faaac73fe6f.png">

If we proceed to payment,
we can pay with a credit card or Paypal.

<img width="1214" alt="buy-3" src="https://user-images.githubusercontent.com/17494745/209847799-66c8c54e-bf16-4719-a324-2b7793e7be21.png">

But how was this implemented?
Is there any service behind this?
For those with a keen eye,
you might have noticed
that in the upper third of the screen,
it seems that this transaction
is being handled by
[`MyCommerce.com`](https://www.mycommerce.com/).

`MyCommerce.com` can be described as a
*payment infrastructure provider*
that takes care of transactions
and payments made by the users of your application
and facilitates integrating payments to your application.
By using these types of services,
it is much easier for *us* developers
to provide different ways of users to pay
and integrate payments *seamlessly* in our applications.

But, as you may be aware,
there are several other Payment processing providers,
such as
There are several Payment processing providers,
the most recognisable are:
[`PayPal`](https://developer.paypal.com/api/rest/),
[`Stripe`](https://stripe.com)
or
[`Square`](https://squareup.com/us/en/).


## How Payment Works

Let's start with an analogy.
Imagine you want to send a parcel to someone.
1. You first drop it in a DHL (or UPS) drop-off point.
2. DHL collects the package and transports the parcel.
3. Once the delivery is complete,
a confirmation e-mail is sent to you and the recipient.

Think of the DHL distribution network
as analogous to a **payment processor**.
And think of the drop-off point
as a **payment gateway**.
To make an online payment,
customers create a transaction
*via payment gateway*
and the *payment processor facilitates communication
between parties* and transfers funds
into the merchant's bank account.
## Payment Processor or Gateway 🤷‍♀️

<img width="1278" alt="gateway_v_processor" src="https://user-images.githubusercontent.com/17494745/208946952-4da1600e-9936-4491-9a6e-a5a7e09c023c.png">
![payment-processor-gateway](https://user-images.githubusercontent.com/17494745/208946952-4da1600e-9936-4491-9a6e-a5a7e09c023c.png)

So, a **payment processor** functions as an intermediary
between the customer's party
(which consists of the buyer and their bank)
A **payment processor** functions as an intermediary
between the customer's bank (or digital wallet)
and the merchant
(which consists of the merchant and their bank).
It is the entity responsible for communicating
between both parties in the transaction.

Meanwhile, the **payment gateway**
is a *point of sale* for online payments.
Similarly to when a customer swipes their card
on a physical credit card terminal,
A **payment gateway**
is a virtual
[*point of sale*](https://en.wikipedia.org/wiki/Point_of_sale)
for online payments.
Similar to when a customer swipes/taps their card
on a **_physical_ credit card terminal**,
online stores need a gateway to securely collect
the customer's payment information.
So *payment gateway is a virtual terminal,
and functions as a point of sale*.
the customer's card details.
A payment gateway
acts like is a _virtual_ credit card terminal.

This whole process of online payment
The whole process of online payment
usually assumes the merchant
has a
[**merchant account**](https://www.investopedia.com/terms/m/merchant-account.asp).
A merchant account is simply
a type of business bank account
that *allows a business
to receive credit card
and electronic transactions*.
and other electronic funds transfers*.

> **Note**: the terms `"payment processor"` and `"payment gateway"`
usually fall under the same term - `payment processor`.
> **Note**: the terms
> `payment processor`
> and `payment gateway`
> usually fall under the same term;
`payment processor`.
This is because they work together to handle payment processing.
So if you see platforms like `Stripe`
being mentioned as a "payment processor",
it's because it offers both `payment gateway` and `payment processor`
bundled together (alongside a myriad of other features).
it's because it offers both `payment gateway`
and `payment processor`
bundled together
alongside a myriad of other features such as fraud prevention.

## Okay... I've seen people using `Paddle`. Is it any different?
## `PayPal` The Original Payment Processor
Okay... I've seen people using `Paddle`. Is it any different?

If you've done online shopping before,
you probably came across a button like this,
which allowed you to purchase the item through Paypal.
If you've done much online shopping,
you have probably came across a button like this,
which allows you to purchase the item through `Paypal`:

![paypal](https://user-images.githubusercontent.com/17494745/208951049-421e123a-e082-433e-8b08-60c7da8c8a57.png)

If you wanted to add a way for users to purchase
an item in your application through Paypal,
you'd have to setup a Paypal account
and use [one of their SDKs](https://developer.paypal.com/home)
to make it possible for customers to buy
through Paypal.
If you want to add a way for `people` to purchase
an item in your application through `PayPal`,
you'd have to setup a `PayPal` account
and use one of their SDKs:
[developer.paypal.com](https://developer.paypal.com/home)

You are basically using the [Paypal E-commerce platform](https://www.paypal.com/us/business/platforms-and-marketplaces)
You are basically using the
`PayPal` E-commerce platform
[paypal.com/us/business/platforms](https://www.paypal.com/us/business/platforms-and-marketplaces)
to setup a payment gateway and processor
for users to pay with Paypal on your site.

Awesome! 🎉

Let's say you now want to add
Now want to add
[`Google Pay`](https://pay.google.com/about/business/implementation/),
as a payment method, as well.
You'd have to create an account,
Expand Down

0 comments on commit 809708b

Please sign in to comment.