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What is a payment gateway?


If you want to sell your products online then you need a payment gateway. A payment gateway is a merchant service that authorizes credit cards and other direct payments. Payment gateways enable customer payment transactions by transferring information between a payment portal and the front-end processors. Payment portals can include websites, mobile phones, or even interactive voice response services.


The payment gateway has to complete several tasks to process a transaction

1. The customer places the order and gives their payment information, and the data is encrypted. Since the transaction is online, it is considered a card not present transaction which has higher processing fees

2. The merchant’s credit card processor then receives the encrypted data as they are processing the transaction

3. The processor then sends the transaction data to the credit card association that the card is connected to which charges the interchange fee

4. The transaction is then approved or denied

5. The transaction if accepted is authorized and the card issuing bank sends the authorization back to the e-commerce website

The above process takes place in a matter of seconds and the funds are available to the merchant within 24-48 hours. If you plan on selling products online or already have an ecommerce website then you likely know that payment gateways and credit card processing fees can cut into your profits but may seem to provide little in return. Therefore, make sure you choose a credit card processor that can provide you secure, innovative and affordable virtual and ecommerce credit card processing.

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