A payment gateway is a secure technology that transfers payment information, such as credit card details, from the customer to the merchant’s bank during online transactions.

It serves as the digital bridge between customers, businesses, and financial institutions to ensure smooth and secure payments.

Well, known examples include NMI, Auth.net, Global. Businesses typically choose a gateway based on security, transaction fees, and how easily it integrates with their systems.

How it works

• Authorization: The gateway encrypts the customer's payment data and sends it securely to the payment processor and then to the issuing bank for approval.

• Transmission: If approved, the transaction is authorized, and the funds are transferred from the customer's account to the merchant's account.

• Intermediary: It acts as the online equivalent of a physical credit card terminal, ensuring sensitive information is protected throughout the process. 

Key features and considerations

• Fees: Gateways typically charge a mix of setup fees, monthly fees, and per-transaction fees, which can include a percentage and a flat fee.

• Security: They use encryption to protect sensitive data, which is crucial for preventing fraud.

• Payment methods: A gateway should support the payment methods your customers use, such as credit cards, digital wallets, and other online payment options.

• Integration: It needs to integrate seamlessly with your e-commerce platform or website, with some offering embedded payment forms to keep customers on your site.

• Reliability: A reliable gateway is essential for ensuring transactions are processed smoothly and successfully.