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