What is a payment gateway and how does it work?

When you start doing research into launching an ecommerce store, one important term that will definitely appear on your radar is payment gateway. While often overlooked by merchants setting up their first online store, it’s an extremely important component that enables online shoppers to pay you on your website. So without a payment gateway, your online store would literally just be a catalogue of products lacking the ability to receive payments. Which isn’t particularly useful to your business or your customers. 

What is a payment gateway?

At its core, a payment gateway is the technology that enables merchants to accept payments from their customers. This is accomplished by acting as the link between your website and the payment provider or customer through which the secure payment data flows through. This includes point-of-sale terminals such as card machines and QR codes that can be scanned via smartphone apps like Masterpass, Zapper and SnapScan in physical brick-and-mortar stores, as well as payment processing portals that receive and process payments made online, such as on ecommerce marketplaces and online stores. 

The infographic below demonstrates the role of a traditional payment