Simple definition
The middleman that checks and processes online payments.
Expanded definition
A technology solution that transmits payment data from the merchant to the payment processor.


Online commerce relies on seamlessly moving money between merchants, banks, and buyers. The digital toll booths facilitating these transactions are payment gateways. Understanding how these gateways enable e-commerce provides insight into processing transactions from websites to bank accounts.

What are Payment Gateways?

A payment gateway is a service that authorizes credit card and direct payments online. Gateways securely route transaction information to the relevant payment networks and financial institutions.

Key gateway functions include:

  • Encrypting payment data during transfers
  • Checking customer account details
  • Providing shopping cart integration
  • Transferring funds into merchant accounts
  • Sharing transaction reports and analytics

Gateways are the required passage between making an online sale and getting paid.

Benefits for Merchants

Partnering with a payment gateway allows merchants to:

  • Accept payments from any card, mobile wallet, or bank account
  • Process global payments across currencies and borders
  • Reduce scope of compliance by offloading security burdens
  • Easily integrate new payment methods and capabilities
  • Access robust reporting and data insights

By leveraging gateways, e-commerce businesses can focus on sales instead of complex financial plumbing.

The Bottom Line

Payment gateways silently orchestrate the symphony of online transactions, enabling commerce to flow smoothly and speedily. These digital toll booths securely direct traffic from websites to issuers and back again, collecting merchant revenue along the way.