Online payments have rapidly become a part of our everyday lives. Online payments are quick and easy. We transact online not only with debit and/or credit cards, but also with net banking, and wallets. Every e-commerce platform in the world can accept payments online. This service can be provided by integrating with a payment gateway.

What is a Payment Gateway?

A payment gateway is an e-commerce application service provider’s merchant service that authorizes credit card or direct payment processing for e-businesses, online sellers, bricks and clicks, or traditional brick-and-shops.

Why is a payment gateway required?

Any business that wants to accept online and credit card payments needs a payment gateway. It encrypts sensitive credit card information and ensures that it is securely transmitted from the customer to the acquiring bank. The payment gateway acts as a bridge between your customer and the merchant, ensuring that the transaction is completed safely and quickly. The technology sends financial data to the appropriate parties to authorize payments and transfer funds from a customer to a merchant.

The payment gateway that you choose imparts trust in the minds of your customers as they make the purchase, hence it becomes the responsibility of a merchant to select the payment gateway such that it is safe and secure. 

How does it work?

These key stakeholders are included in payment gateways:

  • Merchant – The business
  • Customer – the person making the purchase.
  • Issuing Bank – The customer’s account is held by this financial institution.
  • Card Schemes – The Credit Card Company viz. Visa, MasterCard, Discover, etc.
  • Acquiring – The merchant’s account is held by this financial institution.


  1. The cardholder initiates the purchase and pays by clicking on the “Pay Now” button on the merchant’s website.
  2. The payment gateway comes into action and checks with the issuing bank if funds are available and make sure that the transaction amount doesn’t exceed the credit card limit or account balance.
  3. The payment gateway after verification sends encrypted credentials to the card schemes to process.
  4. The card scheme approves and sends information back to the merchant’s website to complete the transaction.
  5. The payment gateway then sends the information to the acquiring bank to move money from the issuing bank which is where the customer holds his account to the merchant’s account. Acceptance of multi-currency payments

By Admin

Leave a Reply

Your email address will not be published. Required fields are marked *