Payment Gateway

A payment gateway is a technology service that acts as an intermediary between a merchant and the financial institutions involved in processing payments. When a customer makes a purchase, the payment gateway securely transmits the transaction data from the merchant to the payment processor, which then communicates with the card networks and issuing banks to authorize or decline the payment.

Payment gateways perform several critical functions: they encrypt sensitive payment data to ensure security during transmission, they validate card details and check for potential fraud, they send authorization requests to the payment processor, and they return the approval or decline status to the merchant. This entire process typically happens in just 1-3 seconds.

Modern payment gateways like Stripe, Mollie, and PayPal combine gateway services with payment processing, making it easier for businesses to accept payments without managing multiple relationships. These integrated solutions handle everything from card authorization to settlement, often including additional features like fraud detection, subscription billing, and multi-currency support.

For online businesses, the payment gateway is the essential link that makes e-commerce possible. Without it, merchants would need direct connections to card networks and banks—something only the largest retailers can manage. Payment gateways democratize payment acceptance, enabling businesses of any size to securely accept cards and other payment methods.