What is a payment gateway?

A payment gateway is an online service provider that connects an electronic shopping cart or virtual terminal/pOS to an electronic payment processor. It is your gateway to other payment development infrastructure, allowing you to accept payments in the form of electronic products.

The gateway’s primary management function is to pass authorization, payment and settlement data securely and from the enterprise merchant’s website and to the merchant’s processor. The merchant processor is in turn connected to a card association (or “network”) which credit card payment gateway (or “network”) to the issuing bank. The articles in this section detail the players in the payment ecosystem and put the gateway in the right context.

payment value chain

Due to the high degree of specialization, the payment ecosystem is very fragmented, and any given payment transaction usually goes through at least five or six different parties, which we call the payment value chain. The following sections describe the different players in the payments ecosystem, along with the nuances in how they function.

When a customer exchanges a credit card for payment for a purchase, the point-of-sale system typically only takes a few seconds to prompt for a signature or pin, and a few more seconds to complete the transaction and print a receipt. Demonstrate the robustness of electronic payment systems where end users are often completely unaware of the intricacies of the underlying plumbing, allowing them to leave their home with no scale in their pockets and arms with their credit or debit cards and full confidence that they will be able to buy what they want goods and services.

A typical payments value chain might include:

payment gateway

Merchant through Account provider (or Merchant through Acquirer)


network (card network)


In a nutshell, this is the role and some key functions of these parties.

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