Glossary
What is a payment gateway? Definition, how it works and examples
A payment gateway is the technology that captures payment details at checkout, encrypts or tokenises them, and sends the transaction to the acquirer or payment method for authorisation, then returns the result to the shop. It is the online equivalent of a card terminal: it moves payment data securely but does not itself hold the merchant contract or settle funds.
- Payment gateway
- A service that securely captures payment data from a website, app or terminal, protects it through encryption and tokenisation, and transmits authorisation, capture and refund requests between the merchant and the acquirer or payment method provider.
At a glance
| Main functions | Capture, encryption and tokenisation, routing to the acquirer, response handling |
|---|---|
| Security standard | PCI DSS v4.0.1; a hosted payment page or iframe typically keeps the merchant in the SAQ A scope |
| Standalone gateway pricing example (2026) | Authorize.net gateway only: $25 a month plus $0.10 per transaction and $0.10 daily batch fee |
| Typical authorisation response time | 1 to 3 seconds for a card payment |
What does a payment gateway do?
The gateway sits between the checkout and the financial institutions. It collects card or account details, protects them, formats the request for the receiving acquirer or payment method, and translates the answer back into a simple approved or declined status with a reason code.
- Capture: hosted payment page, embedded fields or API for card and wallet data
- Encryption and tokenisation: replaces card numbers with tokens for reuse and recurring billing
- Routing: sends the request to the right acquirer, local method or wallet
- Lifecycle: captures, voids, refunds and status notifications by webhook
How does a payment gateway work step by step?
A shopper enters card details in the gateway's payment fields. The gateway tokenises the card, runs 3-D Secure if needed, and passes the authorisation request to the acquirer, which forwards it through Visa or Mastercard to the issuer. The approval comes back the same way within seconds, the gateway notifies the shop, and settlement follows later through the acquirer.
Payment gateway vs PSP vs processor vs orchestrator: what is the difference?
The terms overlap because many companies sell several roles in one contract. The guide to payment service providers explains how to choose one; the table separates the roles.
| Role | Handles data | Holds merchant contract and funds | Typical pricing |
|---|---|---|---|
| Payment gateway | Yes, captures and transmits | No | Monthly fee plus about $0.05 to $0.10 per transaction when sold alone |
| Payment processor | Yes, network messaging | No, works for the acquirer or issuer | Per-transaction fee charged to the acquirer or issuer |
| PSP | Yes, usually includes a gateway | Yes, often as acquirer or via a partner acquirer | Blended, for example 1.5% + €0.25, or interchange++ |
| Payment orchestrator | Yes, routes between gateways and PSPs | No | Per-transaction or monthly platform fee |
Does using a payment gateway reduce PCI DSS scope?
Yes, if the card data never touches your servers. With a hosted payment page or gateway-hosted iframe fields, an e-commerce merchant typically validates PCI DSS with the short SAQ A questionnaire. Sending raw card numbers through your own API moves you into SAQ D or a full assessment.
What are examples of payment gateways?
Standalone gateways include Authorize.net, owned by Visa, and NMI, which connect to an acquirer the merchant signs separately. Adyen, Stripe, Checkout.com, Worldline and Braintree combine a gateway with acquiring. OrsunPay is not a gateway in this sense; it is an orchestration layer that connects a merchant's own gateways and PSPs through one API.
Frequently asked questions
Is a payment gateway the same as a payment processor?
No. The gateway captures and transmits payment data from the shop, while the processor runs the transaction through the card networks on behalf of the acquirer or issuer. Many providers sell both together.
Do I need a merchant account to use a payment gateway?
With a standalone gateway, yes: you sign a separate acquiring contract. PSPs such as Stripe or Mollie include the merchant account, so you sign one contract.
What is the difference between a payment service provider and a payment gateway?
A gateway is a technical component; a PSP is a licensed provider that usually includes a gateway plus acquiring, payment methods and settlement of funds. You can buy a gateway alone, but you cannot get paid with it unless an acquirer or PSP settles the money.
Does a payment gateway hold my money?
A pure gateway does not. Funds are settled by the acquirer or PSP, which is why the gateway contract and the settlement contract can be with different companies.
Can one shop use several payment gateways?
Yes. Merchants use a second gateway for other regions, local methods or as a fallback when the first is down, typically managed through an orchestration layer.