Payment Gateway

By September 17, 2018Industry Terms

A payment gateway is a software or device-based service that receives, protects, and shares transaction information.

Payment gateways may be contracted through the merchant account, provided in conjunction with other vendors’ services, or offered as a stand-alone product.

What Does a Payment Gateway Do?

A payment gateway provides many useful services:

  • Receives transaction information from the merchant’s website and ensures its safe transmission to the payment processor through encryption and tokenization
  • Initiates the authorization process and returns responses to the merchant
  • Calculates taxes
  • May apply fraud detection tools such as geolocation, transaction velocity analysis, blacklists, delivery address verification, device fingerprinting, AVS, and more
  • Converts currencies
  • Processes refunds

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