What is payment gateway?

Businesses have shifted from the traditional to internet-based giving constant addition to the e-commerce ones. They could be physical goods businesses or service-based e-tailers. Either way, there is hence a shift with the payment module. A payment involving the use of electronic mediums. Payment gateway as such allows the merchant to accept credit card and other forms of electronic payment. They are a merchant service that supports online money transfer.

In other words, a payment gateway is a 3rd party service that processes, verify and accept or decline the credit card transactions entered by the consumer for the merchant. A consumer places an order from the merchant’s website. He/she then enters the transaction data such as his /her credit/debit card number for payment, the data gets encrypted by the payment processor through the gateway, the payment processor then communicates the issuing bank the data entered. The payment gateway retrieves feedback back from the bank which could either be an acceptance or a decline. The response is then transmitted to the payment gateway and to the merchant’s website. With acceptance, the payment is immediately credited to the recipient’s account, the merchant.

The whole payment process is necessary because there is huge concern regarding security when it comes to payment. Which is the sole reason for payment gateway? Security is a major component of all payment gateways.Every transaction occurring between the merchant and the issuing bank is encrypted to protect sensitive financial information.


Payment gateway as a service sure is an electronic alternative to traditional paper methods. Not having the right payment method can lead to huge card abandonment and the incurring of losses. However, before you integrate payment gateway to your website’s shopping cart make sure it is highly optimised. Because less optimized payment gateway can prolong the checkout process and have loss of consumers. Make sure the payment gateway you integrate also accept foreign currencies. Offering various payment methods such as debit card, credit card, internet banking etc is also the wisest decision. Also, check if the payment gateway operates on the more recent ideas such as Bitcoin or Mobile wallets. Because not all consumers have the same payment method. Once you have the knowledge of which gateway works for your website you can expect an instantaneous and secured payment.



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