What is a payment gateway?
A payment gateway is a type of payment service technology that securely connects businesses and customers, allowing online and mobile payments to be processed securely and quickly. It is necessary for merchants that process online payments—either ecommerce or click-and-mortar retailers. When customers make a purchase, the payment gateway sends their credit card or debit card information to the credit card network to be processed. Then, it securely transmits the payment information back to your business and tells you whether or not the charge is authorized. If the charge is authorized, the order is completed.
Payment gateways vs payment processors
While both payment gateways and payment processors are payment solutions that connect the issuing bank account with the receiving bank account and transmit online payment information, they aren’t one and the same. While payment processors are required to process transactions, payment gateway technology can help securely authorize those transactions to ensure the acquiring bank is paid. This is crucial for protecting transaction information in online and mobile transactions.
Need a payment gateway? Things to consider:
Merchants should look for payment processors that are PCI compliant to ensure their encryption is secure. They should also consider the payment methods their customers use, as each payment gateway typically does not accept payments from every card issuer and payment processing portal. Stacking payment gateways, or using multiple payment gateways on your platform, can give customers more options for possible payments beyond credit card payments—not just multiple credit card issuers, but also options like PayPal, Venmo, and ApplePay.