What Is a Payment Gateway?
Explains how transactions flow from customer to bank via a payment platform
Intro
A payment gateway is a technology that allows businesses to accept payments online. It's like a digital cashier that processes transactions between customers and businesses.
Main Definition
A payment gateway is a service that authorises and processes payments for online and physical businesses. It acts as an intermediary between the merchant and financial institutions, securely transmitting transaction data. Payment gateways are essential for businesses that want to accept credit card, debit card, or digital wallet payments. A common misunderstanding is confusing a gateway with a payment processor — the gateway communicates data, while the processor actually moves the funds.
Examples
Online Retailer: An e-commerce store uses a payment gateway to accept card payments for online purchases.
Subscription Service: A streaming platform processes monthly fees through a secure gateway integration.
Taxi Service: A transport operator integrates a gateway into their app or app-based POS to handle ride payments.
Key Relationships
Cash Flow: Gateways ensure payments are captured and settled quickly, supporting revenue visibility.
Expenses: Gateways typically charge transaction fees, which should be factored into cost planning.
Tax: Gateways provide downloadable transaction reports that help with reconciliation and tax filing.
Compliance: Gateways must meet PCI DSS standards to protect cardholder data and reduce fraud risk.
Frequently Asked Questions
Do I need a payment gateway for my online store?
Yes. If you're accepting online payments, a gateway is essential for secure and authorised transaction processing.Are payment gateways secure?
Reputable gateways use encryption, tokenisation, and comply with industry security standards.Can I use multiple payment gateways for my business?
Yes. Many businesses use more than one gateway to offer flexibility, reduce risk, or optimise processing fees.
