Term

What is Payment Gateway?

3 MIN READ

Payment Gateway

A payment gateway is a technical solution that allows online business owners to accept payments on their website using bank credit and debit cards. Thanks to payment gateways, payments from customers go to the merchant’s (seller’s) account in an acquiring bank. In other words, as soon as a customer enters their payment details on your website, the payment gateway ensures that this data is securely sent to the payment processor. 

The transaction path will consist of the following participants: 

Cardholder – Shop – Payment gateway – Acquiring processor – MPS (Visa / Mastercard) – Card issuing bank – Issuer processor.

Using the payment gateway is impossible without an Internet connection. The security of information exchange through the payment gateway is achieved by encrypting personal data (such as credit card number, pin code, etc.) and using SSL (Secure Socket Layer). 

As an ecommerce store owner, you don’t need to understand how a payment gateway actually works. In practice, all you have to do is select a gateway and then integrate it into your online store. After that, it just works allowing you to collect payments from customers.

How to choose a payment gateway

Consider the following when choosing a payment gateway: 

  • Security – you need a reputable vendor that provides safe checkout experiences for your customers
  • Cost – pay attention to your gateway’s costs and do your research before integrating it, so you will not be surprised when a payment gateway provider takes a fee from every transaction
  • Accepted payment methods – the easier you make it for customers to make a purchase, the more likely they will make it 
  • Compatibility – your gateway needs to integrate with your current platform — both from a technical and design standpoint
  • Payment location – some gateways provide an API that allows you to accept payment directly on your site, others reroute visitors to a third-party site – consider which gateway provides the best user experience for your shoppers.

Almost all ecommerce platforms support all popular types of payments such as PayPal, Amazon Pay, Authorize.Net, Stripe, and Square, and integrate with the most popular ecommerce platforms like Magento, BigCommerce, WooCommerce, Shopify. But you may not be able to use a particular payment gateway if it doesn’t work in your country.

What are payment gateway fees?

Payment gateways charge a variety of fees, which can include: 

  • Monthly fee
  • Flat transaction fee
  • Variable fees based on a percentage of the amount
  • Additional fees for chargebacks, international card payments, etc.

Always make sure you understand the payment structure with your gateway before committing to it in the long run. At the basic level, you can expect to pay from 2.9% + 30 cents per transaction.

The most popular payment gateways 

PayPal, Stripe, Square, SecurePay, Worldpay, Authorize.net, 2Checkout.com, Braintree.

 

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