A payment gateway is a service that manages and validates businesses’ electronic transactions. It serves as a conduit for information between the online store and the bank handling the transaction. When a customer starts a transaction on a merchant’s website, the payment gateway securely sends the payment details to both the issuing bank and the acquiring bank, the bank that processes the payment on the merchant’s behalf. In order to complete the transaction, the payment gateway then receives a response from the banks and relays it back to the merchant and the client.
Payment gateways typically use encryption to secure the transmission of sensitive information, such as credit card numbers, between the merchant and the banks. They also help merchants comply with regulations related to payment processing, such as the Payment Card Industry Data Security Standard (PCI DSS).
There are many different payment gateways available, and merchants can choose the one that best fits their needs based on factors such as fees, supported payment methods, and integration with their website or point-of-sale system. Some common payment gateways include PayPal, Stripe, and Billplz.