What Is a Payment Gateway?

A payment gateway creates a secure link to encrypt and safely transfer credit card data. While preventing the leakage of a customer's personally identifiable information during a transaction, the payment gateway authenticates the legitimacy of a card.

What Is a Payment Gateway?

Here’s what the process looks like when a cardholder makes a purchase:

When a customer inputs their payment information online or displays their card in-store, the transaction is started.

The payment gateway receives data from the card, which is then forwarded to the merchant's bank.

To route the transaction to the issuing bank, the payment processor speaks with the customer's card network (such as American Express or Visa).

The issuing bank will check the money and decide whether to approve or reject the charge. This stage includes looking for phony or dubious transactions as well.

Once the card-issuing bank has confirmed the transaction, a code is transmitted to the payment processor, who then sends it to the payment gateway.

A payment completed notification is displayed to the consumer and merchant on the card reader. It all happens in a matter of seconds.

To make it easier for businesses to work with only one organization to execute cardholder transactions, payment gateways are occasionally connected with virtual credit card terminals or made available as an internal service by a payment processor. Businesses of all sizes should take security seriously; many find the extra layer of security provided by a payment gateway to be desirable.