What Is a Payment Gateway?

A payment gateway is an e-commerce application that authorizes payments for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar businesses. It is the virtual equivalent of a physical point of sale terminal located in most retail outlets. Payment gateways encrypt sensitive information, such as credit card numbers, to ensure that information passes securely between the customer and the merchant.

How Do Payment Gateways Work?

A payment gateway facilitates the transfer of information between a payment portal (such as a website, mobile phone) and the Front End Processor or acquiring bank. Here is a step by step guide detailing how Payment Gateways work: