Definition:
A payment gateway is a technology service that securely transmits the information needed to process an electronic payment and informs the merchant of the outcome. It connects the checkout process with payment processing systems and the financial institutions involved.
In an online store, it allows customers to pay without the merchant having to develop all of that infrastructure. It is not the customer’s bank and does not independently decide whether they have sufficient funds to pay.
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What a payment gateway is used for
A gateway allows a website or application to accept payments and determine whether a transaction has been completed, declined or requires further action from the customer.
It forms part of the checkout process in ecommerce. Depending on the provider and integration, it can support cards, digital wallets and other methods, as well as facilitate refunds or recurring payments.
How a payment gateway works
A card purchase involves the merchant, the gateway, the processor and financial institutions. Although the route varies by integration, it can be summarised as follows:
- The customer initiates the payment. They enter their details in an integrated form or access a payment page hosted by the provider.
- The gateway transmits the information. The request reaches the processing system, which routes it to the card network and the issuing bank, the institution that issued the card.
- Checks are carried out. The issuing bank assesses the transaction and may ask the customer to confirm their identity.
- The merchant receives the result. The response returns through the payment systems, allowing the order status to be updated.
For example, when buying a pair of trainers, a customer may need to confirm the payment in their banking app. The store then receives the transaction response.
Authorising a payment does not mean that the money has already reached the merchant’s account. Capture confirms that an authorised transaction should be charged; settlement and the crediting of funds take place according to the service’s timelines and conditions.
Differences between a gateway, a processor and a TPV virtual
These terms often appear together because a single provider can combine several functions:
- Payment gateway: connects the checkout process with payment systems and transmits transaction information.
- Payment processor: handles transactions and the necessary communication with card networks and financial institutions.
- TPV virtual: the term used in Spain for an online payment acceptance solution, usually contracted through a bank and supported by a payment platform.
These are therefore not always three products that need to be purchased separately. A TPV virtual can include access to a gateway and the necessary processing services.
Security and authentication
Gateways use encrypted connections to protect information in transit. Many solutions also use tokenisation, which replaces card details with an identifier that can be used for certain transactions without exposing the card number again.
Authentication serves a different purpose: checking that the person paying is the legitimate cardholder. The EMV 3-D Secure protocol enables merchants and issuers to exchange information to authenticate the customer. Some transactions require additional confirmation, while others can be completed without this visible step.
These measures reduce risks but do not eliminate fraud. Using a gateway also does not remove the merchant’s responsibility to protect its website and meet the security obligations applicable to its integration.
Examples of payment solutions
Providers offer different services with overlapping functions. A few examples help illustrate this variety:
- Redsys: provides technology used in TPV virtual solutions offered by banks.
- Stripe: brings together tools for integrating payment acceptance and management into websites and applications.
- PayPal: allows merchants to add its payment service to the checkout process and offers business payment solutions.
- Adyen: offers a platform for managing online and in-person payments.
Bizum is a payment method, not a direct equivalent of all these platforms. A merchant can offer it through a compatible solution.
What to consider when choosing a payment gateway
The choice depends on how the business sells and what its customers need. These aspects are worth reviewing:
- Compatibility: integration with the store, mobile usability and maintenance requirements.
- Payment methods: available options for the countries and currencies the merchant works with.
- Costs: transaction fees, other charges and refund or dispute conditions.
- Operations: payout timelines, issue management and support.
- Recurring payments: support for subscriptions where these form part of the business.
As part of an ecommerce strategy, customers also need to understand how to pay and what to do if a transaction fails. A suitable integration can reduce obstacles, but does not guarantee more sales on its own.