Payment Gateways 101

payment gateway - credit card ecommerce

A payment gateway provides a way for merchants to accept credit card payments on the internet or a mobile application. Some payment gateways will also include a virtual terminal which can be used by the merchant to accept payments over the phone. The merchant will also need an Internet merchant account to facilitate the transfer of funds from your customer’s credit card to your bank account. The payment gateway may also be called an IP payment gateway when referring to payment gateways used for Internet transactions. It is the infrastructure that allows a merchant to accept credit cards and other forms of electronic payment. The virtual terminal is basically the web version of a physical credit card machine — also called a point-of-sale (POS) terminal. It’s a software application that is hosted online, on the service provider’s servers, which can be accessed from any Internet connected web browser.

Payment gateways securely transmit data and process the payment transaction between you and your customers. The service it provides is comprised of a system of computer processes that transmit, verify, and approve or decline credit card transactions on behalf of the merchant through secure Internet connections.

The following is a simplified explanation of the payment gateway’s role in processing credit card transactions:

  • Your customers enter their credit card information on your eCommerce site during the checkout process.
  • The website securely transmits the card data to the payment gateway for further processing.
  • The credit card information submitted to the payment gateway is checked for accuracy against the information on file with the credit card company.
  • The credit card company will approve or decline the transaction and transmit a response to the payment gateway.
  • If the information is accurate and the charge is approved, the payment gateway then settles the payment from your customers’ credit card so the funds will be transferred into your bank account.

Payment gateways not only authorize a variety of transactions for e-commerce businesses, they may also authorize credit card payments for online retailers and traditional brick and mortar businesses that integrate a combination of both offline and online presences. There are many different kinds of credit card processing options that you can use, depending on the type of business you own — and goEmerchant has payment processing solutions for them all including:

  • eCommerce
  • Enterprise
  • Retail
  • Non-profit
  • Subscription
  • Restaurant
  • Professional Services
  • Fitness
  • Education
  • Property Management
  • Insurance
  • Healthcare

From start-ups to enterprise level, multi-locations and expanding businesses, we can help you integrate secure payments into your mobile app, proprietary software or POS system. Our simple payment gateway integration API can save you time and money.