Definition
A payment gateway is a technology solution that securely processes online payments by transmitting transaction information between a merchant’s website, the acquiring bank, and the issuing bank. It enables seamless payment acceptance for ecommerce and digital platforms.
How this works
When a customer initiates a payment, the gateway encrypts the payment information and forwards it to the acquiring bank. The issuing bank verifies the transaction, and the gateway communicates the approval or decline back to the merchant, completing the transaction securely.
Benefits
• Secure processing of online and digital payments
• Supports multiple payment methods including cards, UPI, wallets, and BNPL
• Reduces fraud and chargebacks with encryption and 2FA
• Enables fast and smooth checkout experience
• Provides reporting, reconciliation, and settlement information for merchants
FAQs
Q1. What is the main function of a payment gateway?
Its main function is to securely transmit payment information between merchants, acquiring banks, and issuing banks, enabling successful online transactions.
Q2. Can payment gateways process multiple types of payments?
Yes. They support credit/debit cards, UPI, wallets, net banking, and sometimes BNPL options.
Q3. How do payment gateways ensure security?
Payment gateways use encryption, tokenization, PCI DSS compliance, and two-factor authentication to protect sensitive payment data.
Q4. Do merchants need technical integration for a payment gateway?
Yes. Integration can be via APIs, SDKs, or plugins depending on the platform or website.
Q5. Can payment gateways help with reconciliation?
Yes. Most gateways provide dashboards, reports, and automated settlement notifications to simplify reconciliation for businesses.