Behind every cashless payment is a sophisticated network of processes and software, ensuring an online transaction travels from the consumer to merchant in seconds. A payment gateway is part of this process and, for online businesses, its reliability is essential.
Whether you're just getting started with online payment processing or looking to enhance your current setup, it's important to know how they work and why they're essential for businesses aiming to succeed in a digital marketplace.
As part of the payment process, a payment gateway is the first step in a transaction. It's a service that connects your business's online store to a financial institution that can process customer payments.
Payment gateway service providers help merchants accept payments from customers, encrypting the payment information and sending an authorization request to the payment processor to confirm that funds are available.
If the transaction is approved, funds are allocated, and confirmation is sent back through the payment gateway to the merchant. Whether customers are buying from a website, app or store, e-commerce payment gateways are a key part of digital payments, ensuring fast and secure transactions.
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Customer checkout page |
Website integration |
Data security |
Connection to banks |
Business dashboard |
Tools |
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The customer-facing interface during checkout, like a secure payment page |
Connection with your website, e-commerce platform or point-of-sale system to communicate with your store's backend |
Built-in encryption and security features to protect sensitive customer data |
Link to payment processors and banks that authorise transactions |
A dashboard to track payments, manage refunds and view payment statuses |
Plugins or apps to help you set it up on your site or app |
When a customer makes a purchase, the payment gateway collects their payment information — whether it's card details, digital wallet info, or bank transfer data.
To keep customer data safe, the payment gateway scrambles (or encrypts) the information so that sensitive information can't be accessed by anyone unauthorized.
The gateway securely transfers the payment data from your website or point-of-sale system to the relevant bank or card provider.
The payment gateway checks with the customer's bank to verify the details and ensure there are enough funds or credit available to complete the online transaction.
Once the payment is authorized, the gateway sends a confirmation back to your website or system, completing the transaction for the customer.
Some payment gateway solutions handle the entire transaction process directly, while others act as a proxy, routing payment details to a third-party processor. Using a proxy server for online transactions reduces your responsibility as a merchant for managing sensitive customer data.
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Type |
Hosted |
Self-hosted |
API |
Local bank integration |
Platform-based |
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Description |
A third-party service that redirects customers to a separate payment page to complete the transaction |
The payment form is hosted on your own website, but the payment data is sent to a third-party service for processing |
The gateway uses APIs to allow businesses to design a fully customized payment system |
Connect directly with your bank's payment gateway |
Comes pre-integrated with e-commerce platforms |
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Transaction speed |
Slower due to redirection to an external site |
Dependent on merchant's website but generally fast |
Fast |
Varies by bank; there may be a delay due to bank processing times |
Fast |
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Good for |
Small to medium-sized businesses wanting easy setup and reduced PCI compliance responsibilities |
Medium to large businesses looking for greater control over payment processes |
Businesses with development resources needing customizable payment solutions |
Businesses in markets that prefer bank-backed payment options |
Businesses using specific e-commerce platforms |
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Pros |
• Easy setup, little technical expertise required • Good security features, the provider handles security and compliance • Customers trust well-known third-party providers |
• Customizable, with full control over the payment experience and branding • Customer stays on your website for a seamless experience |
• Complete control over design and functionality • Customer stays on your website for a smoother checkout • Scalable for businesses looking to grow and adapt their payment system |
• Direct link to bank simplifies settlements and banking processes • Banks may offer more competitive rates |
• Minimal integration work, as the gateway is built into the platform • Everything from payments and order tracking is managed in one place |
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Cons |
• Less control, with limited customization and branding options • Redirecting customers to a different page can be disruptive and lead to cart abandonment • Fees may be higher compared to other options |
• Higher responsibility as you'll need to manage security, regulations and handling customer data • Requires more maintenance, often needing development support |
• Setup requires development skills and ongoing maintenance • You're responsible for ensuring data security and regulatory compliance |
• Less flexibility and fewer payment methods available compared to other gateways • Not ideal for businesses looking to expand globally |
• Limited to the features and pricing of the e-commerce platform • Harder to switch providers • Higher fees compared to standalone options |
To understand the different roles a payment gateway, payment processor and payment terminal play, think of the gateway as initiating and securing the transaction, while the processor handles the transfer of funds. The terminal is a physical device that allows in-person payments in a retail or point-of-sale (POS) setting.
A payment gateway service is responsible for collecting card details from the customer, ensuring the information is encrypted and securely transmitted to the processor. Once the information is transferred, the payment processor takes over, managing the actual transfer of funds between the customers' bank and the merchant account.
The terminal captures information from the customer's card, either through a swipe, chip or tap, and passes the information to the payment gateway or processor.
Merchants will work with payment service providers for gateways, terminals and processing services. Together, these systems ensure card details are collected, secured and processed, allowing merchants to accept payments with ease.
Not all payment gateways accept international payments. One of the biggest challenges when managing multiple currencies is dealing with fluctuating exchange rates and potential conversion fees. Cross-border payments can also be more expensive due to higher transaction fees and extra banking costs.
A provider that can handle cross-border transactions and alternative payment methods will allow your business to accept orders from customers worldwide, regardless of location or currency. This is especially important as global e-commerce continues to grow and customers expect a seamless experience, no matter where they're shopping. According to a recent survey, 52% of global online shoppers purchase from overseas retailers. Here's how a provider can help.
There's no one-size-fits-all payment service when it comes to choosing the best provider. It all depends on your specific business model, the regions you operate in and your customers' needs. Some come with just the basics, while others have extra features. Key points to consider, however, include:
If you have the technical know-how, you can create your own payment gateway. In the long run, this ends up being the most cost-effective option if your business processes a large number of transactions per day, since you'll bypass some of the fees that come with payment processing.
But for most merchants, a plug-and-play solution is the easiest way to get your e-store up and running.
Payment gateways are stepping up to meet the demands of an ever-evolving e-commerce landscape. As subscription-based businesses boom, gateways are getting smarter at handling recurring payments, keeping transactions rolling for businesses and customers alike. Meanwhile, innovations like biometric authentication – fingerprint scans or facial recognition – are making checkouts even faster. And AI-driven fraud management solutions are working behind the scenes to stop fraud before it starts.
As the lines between online and offline shopping blur, consumers increasingly expect omni-channel payment options that let them switch effortlessly between in-store and digital checkouts.
All these innovations are pointing to a future where payments are faster and more secure, to cater to the consumer demand for easy, flexible payment options. One where digital wallets, one-click payments, and even cryptocurrency are becoming the norm.
Today's online businesses need payment gateways that are not only fast and secure but also flexible enough to handle the increasing complexity of global transactions. Having the right gateway solution is critical to staying competitive.
At Antom, our payment solutions are designed with modern businesses in mind. We partner with merchants in Asia, the USA, Europe, Latin America and the rest of the world, offering the best payment gateway solutions for global transactions.
We're here to support you in finding the best payment solutions for your needs. Contact us to discuss how Antom can help enhance your payment systems and drive your business forward.