Payment Gateway Huong Vu September 15, 2023

Payment Gateway

What is a payment gateway?

A payment gateway is an application for merchants to accept payment by debit/credit card or digital wallet. It is a technological device that is often used in eCommerce for online and traditionalbrick-and-mortar stores. The service is needed for businesses to make online payments with customers, for example in case they do not prefer to pay in cash. 

Payment gateways may include apoint-of-sale (POS) system in physical stores, and ‘checkout’ entry in online stores where customers can make a purchase by entering their card information. 

Examples of payment gateways are PayPal, WePay,, Stripe, etc.

How does a payment gateway work?

Often provided by a third party, a payment gateway acts as a processor for payments between traders and consumers. It is responsible for providing the acquiring bank with customers’ information to process payments. If the information provided by the customer matches with what has been filed in the card, payments will be processed. Information about the transaction will often be sent to customers once it has been done.

There are multiple ways to work with payment gateways, namely swiping cards along the magnetic strips, providing personal identification number (PIN), or using smartphones as payment devices. 

Two types of payment gateways and what to choose?

  • Hosted payment gateways: This type takes customers away from the ‘checkout’ page, to the Payment Service Provider (PSP) page. After providing payment details and completing the transaction, customers are then redirected back to the website. This gateway is secure and simple, but could be harmful to the conversion rates (because customers can leave before making the transactions). 
  • Integrated payment gateways: Customers are not directed to another page but stay on the website to make the transaction. You have to connect your site to the API of the gateway. This type does not harm the conversion rates, but may need a programmer to do possible customizations for your site.