What is a Payment Gateway?

by Jul 29, 2021General Merchant Account

If you’re selling things online, you’ve undoubtedly come across the term payment gateway, so let’s review what that is quickly.

A payment gateway is a very critical and essential piece of software that’s involved in an online merchant retail account and credit card transaction.

A payment gateway is simply a piece of software. It stands between the shopping cart solution, payment page, or the retail point-of-sale device that might be in a retail store or cash register system. It stands between that and the merchant account or the banks.

what is a payment gateway blog image
FEATURED VIDEO

The payment gateway sits in between the bank and the point of sale. That is the software that allows the transaction to go back and forth in a secure fashion to process, pre-authorize, and actually complete the full credit card transaction settlement cycle.

3 Main Ways a Payment Gateway is Utilized

There are 3 main ways that a payment gateway is utilized. Two are predominantly used, but there are some others. The three ways are through payment integration, a visual terminal, or a hosted payment page.

 

1. Payment Integration: This would also be known as a payment gateway API, software code, or gateway integration. What that means is you simply have software like WooCommerce, Shopify, or something like that.

On one end, that’s the software that you’re setting up in your store and the payment gateway plugs into that software. This is so you can, on the back end, connect your merchant account.

So, the first way a payment gateway can be utilized is through that API that you can connect to lots of different software.

ayment integration image

2. Virtual Terminal: Most payment gateways will come with a way to login to a virtual terminal, which is a back-office software. This means that it is username and password-protected, so that only you and your staff, will see that payment gateway interface.

 

You can take credit cards over the phone, or you can take them in-person and enter them into the payment gateway. Most often, it’s over the phone where you’re typing the credit card data and customer information right into that virtual terminal payment portal.

 

With certain payment gateways, you can securely store and properly tokenize the credit card data on the merchant account servers, and that also could be part of the payment gateway. 

virtual terminal image

3. Hosted Payment Page: This is also referred to as an order form or a hosted form. Essentially, the payment gateway company is often the merchant provider (i.e. Authorize.Net, CardPointe, NMI).

Those payment gateway providers also offer a hosted payment form. There’s a sample of one in the video from CardPointe. That is also part of the payment gateway because the code is actually integrated on the back end.

All you have to do as a business owner is sign up for the merchant account, and you get access to a page like that. 

virtual terminal image

Those are the three primary ways to use a payment gateway and here’s the video if you’d like to watch it. I have additional video content on payment gateways.

 

There are playlists and other resources I link up in the video descriptions. If there’s a blog post that goes along with it, I’ll reference those as well as pdfs and other resources that I can provide to you. 

 

Watch those other videos because in some of them I do go into more detail on how to do integrations (for example with WooCommerce, Shopify and some others). There’s actually step-by-step tutorials on how to plug those gateway fields into your software, so you can start taking payments and sell products and services. 

If you are new here, welcome! Comment if you have questions about payment gateways and how you’re using it.

 If there’s one thing in particular that you’ve done some research on or that caught your eye (maybe a list of WooCommerce payment gateways, which is listed right on their website), or if you have a question about any of those, comment below — I’ll reply back.

If you’d like to get started with a simpler, less expensive, payment gateway solution click here to get started or schedule a consultation with me.

Brian Manning

Bancardsales founder and 15 year payment processing veteran, Brian Manning has helped thousands of businesses streamline their electronic payment systems. With a healthy disdain for things like terminal leases and "lowest rate" guarantees he regularly advises on best practices to anyone setting up merchant account related solutions. Brian's mission and passion is to help business owners use their merchant account simply as one tool in the big picture of growing their own business and creating an experience that is positive and meaningful for their customers.

Brian Manning

Bancardsales founder and 15 year payment processing veteran, Brian Manning has helped thousands of businesses streamline their electronic payment systems. With a healthy disdain for things like terminal leases and "lowest rate" guarantees he regularly advises on best practices to anyone setting up merchant account related solutions. Brian's mission and passion is to help business owners use their merchant account simply as one tool in the big picture of growing their own business and creating an experience that is positive and meaningful for their customers.

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *