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What is Payment Gateway?

Payment Gateway is an E-commerce Service that processes the payment of Credit Card for Online and Mortar Stores. These transactions facilitate the transfer of important information between Payment Gateway, Web-enabled Mobile Devices / Websites, and Front End Processor / Bank Payment Portals. Payment Gateway plays an important role in the process of E-commerce Transaction, which allows payment between merchant and customer.
Payment Gateway

Payment Gateway Providers:

  • Skrill
  • Amazon payments
  • Paypal Payments Pro
  • Stripe
  • PayU
  • Payza
  • SecurionPay
  • Adyen
  • BitPay
  • BlueSnap,etc

Payment Processor deals with transactions and data and Communications, although Payment Gateway authorizes fund transfer between Buyers and Sellers.

What Payment Gateway does:

Payment Gateway work is to make online payment successful by sharing information between online website/portal and bank. They work as a bridge between the Bank and Merchant Website. As soon as you pay with your Credit Card or Net Banking, it goes to the Request Bank and Bank approves that payment and after successful payment, you are directed to that website and you can see the message of payment successfully.

How Payment Gateway works:

When a customer orders from an online store, Payment Gateway does a lot of work to finalize the transaction, such as -

* Encryption

* Authorization Request

* Filling the Order


It is the process of encrypting the data between the Web Browser and the Web server. Then gateway transmits transaction Data to the payment processor used by the seller's acquisition bank.

Authorization Request

Payment Processor transmits data of a transaction to a Card Association. The issuing bank authorizes the request of Credit Card and then approves or denies it.

Filling the Order

Processor then moves forward from the dealer and consumer to the Payment Gateway authority. Once Gateway receives this response, it sends it to the website/interface to process the payment. Here it means that it generates a proper reaction. This complicated and lengthy process usually takes only a few seconds. At this point, the trader fills the order.

How Payment Gateway Works Diagram:

Other works of Payment Gateway:

Payment Gateway also helps screen orders with the help tool. This screening process reduces the risk of fraud as much as possible. Gateway fraud is included in the Detection Tools.

* Delivery Address Verification

* AVS Checks

* Computer Finger Printing Technology

* Velocity Pattern Analysis

* Identity Morphing Detection

* Geolocation

Benefits of Payment Gateway:

If you have a shopping website or you offer any service online, you will also need to apply Payment Gateway to your website portal so customers can purchase your service product online. The biggest advantage of this is that you can get paid money directly from the customer in your bank account. It is Fast, Secure and Easy. If seen in terms of security, Payment Gateway is fairly secure and all information is encrypted and no customer information will leak.

Payment Gateway Fees Charges:

Payment Gateway Service is not free, whenever a transaction is done, on per transaction these Payment Gateway Service Providers charge some percent of charge, that charge may be 2% or 3%. Suppose a customer has paid you 10,000, then 2-2.5% from that 10,000 will go directly to the Payment Gateway fees. You do not have to pay Setup Fees and Annual Maintenance Fees.
And this is how the payment gateway works.

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