--- title: Payment Gateway Definition description: What is a Payment Gateway? We’ll define this credit card processing provider and supply some basic information when selecting one for your business. image: https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/payment-gateway-definition.svg --- [tel:1-800-601-0230](tel:1-800-601-0230) 800-601-0230 - Features - Solutions - Developers - [Pricing](https://www.payjunction.com/payments/pricing.html) - Resources [See a Demo](https://www2.payjunction.com/tour-payjunction) Features - EXPLORE PRODUCTS [No-code Payments Integration®](https://www.payjunction.com/payments/no-code-payments-integration.html) [ZeroTouch Terminal](https://www.payjunction.com/payments/smart-terminal.html) [Portable Terminal](https://www.payjunction.com/payments/portable-credit-card-reader-terminal.html) - ACCEPT PAYMENTS [Invoices](https://www.payjunction.com/payments/electronic-invoices.html) [ACH Electronic Checks](https://www.payjunction.com/payments/ach-payments.html) [SmartSurcharge®](https://www.payjunction.com/payments/smart-surcharge.html) [Cards on File](https://www.payjunction.com/payments/store-credit-card-info.html) [Rapid Refunds](https://www.payjunction.com/payments/credit-card-refund.html) [Recurring Billing](https://www.payjunction.com/payments/recurring-payments.html) [Ecommerce](https://www.payjunction.com/payments/ecommerce-merchant-services.html) [Mobile App](https://itunes.apple.com/us/app/payjunction/id1324839420?ls=1&mt=8) - EXPLORE CAPABILITIES [Overview](https://www.payjunction.com/payments/payment-processing-solutions.html) [Integration Marketplace](https://integrations.payjunction.com/) [Remote Signature](https://www.payjunction.com/payments/signature-capture.html) [Multi-Location](https://www.payjunction.com/payments/enterprise-payments.html) [Sales Reports](https://www.payjunction.com/payments/sales-reports.html) [Search and Export](https://www.payjunction.com/payments/transaction-history-search.html) [Customization](https://www.payjunction.com/payments/custom-payment-software.html) Solutions - [Veterinary Streamline payment workflows and get paid faster with up-front deposits and payment schedules for high-cost procedures. 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Then you used a Payment Gateway without even knowing it. A Payment Gateway provides a safe method of transferring cardholder data from a website to a payment network for processing. It communicates the confirmation of sufficient funds and the transaction approval back to the website. It’s the technical glue that connects the point of sale to the payment network and is unique to card-not-present, online payments. Now, if you’re looking to accept online payments, you may be wondering how a Payment Gateway fits into the process. After all, there are shopping carts that your customers use to input their information and [Merchant Service Providers](https://blog.payjunction.com/merchant-service-provider/) who equip you with a merchant account to accept online payments. A [Payment Gateway process](https://blog.payjunction.com/payment-gateway-process) works silently in the background, processing and providing a response to the card-not-present payment request as the customer’s screen refreshes. ## Payment Processing Demo Schedule 15 minutes with a payments expert Get a customized PayJunction product walk-through Understand requirements and pricing Determine your SAVINGS! GET DEMO NOW ## The Payment Gateway Process In what is (ideally) a matter of seconds, Payment Gateways undertake a long list of impressive steps to authenticate and [authorize](https://blog.payjunction.com/credit-card-authorization) your e-commerce transactions. We say this is ideally the case because a gateway with poor user experience or too many steps can cause customers to bounce and fail to complete their purchases. Payment Gateways accomplish their task in the following sequence: **Step 1:** The customer enters the payment information and indicates the desire to complete the purchase. The cardholder data is encrypted and sent off. **Step 2:** The encrypted data goes to the merchant’s Payment Processor. **Step 3:** The processor sends the transaction to the appropriate Card Association, which include Visa, MasterCard, Discover and Amex. An [Interchange](https://blog.payjunction.com/interchange-plus-pricing-tiered/) rate is assessed for the transaction. Note that due to the higher risk of fraud for card-not-present transactions, the Interchange rate is higher for online payments. **Step 4:** The transaction is approved or denied based on the presence or lack of sufficient funds. **Step 5:** If sufficient funds are present, the transaction is authorized. The customer’s issuing bank transmits the authorization back to the payment processing network, the Card Association and finally the merchant. The Payment Gateway provides confirmation to the e-commerce site or shopping cart. **Step 6:** Although steps one through five take a matter of seconds, the transaction will often sit as [pending](https://blog.payjunction.com/pending-transactions-explained/) for 24 to 48 hours before the funds are withdrawn from the customer’s credit card and deposited in the merchant account. As with any provider of a service, no two Payment Gateways are entirely alike. From price to simplicity and security, the following are considerations you should make when selecting a Payment Gateway for your business’s e-commerce. ## Pricing and Fees If you have already been accepting credit cards at your business for some time, the idea of paying a fee for a transaction service is no surprise. The best Payment Gateways don’t charge a [gateway fee](https://blog.payjunction.com/merchant-account-fees/) simply to use their services, but such fees are indeed common, so it would be prudent to ask about such fees up front as you compare your options. Your best chance of avoiding these recurring fees is by using a gateway that’s an extension of another payment service (i.e., a combined [all-in-one Merchant Service Provider and Payment Gateway](https://blog.payjunction.com/payment-gateway-bill-e-commerce/)). Typically, these businesses are already making money on your account, negating their need to charge a fee to cover the cost of their services. ## Simple Setup As stated before, a Payment Gateway fits into an ecosystem of providers. By merging your Merchant Service Provider with your gateway, you can reduce the number of bills you receive, slash some fees and have a better understanding of your effective processing rate. When it comes to shopping carts, your gateway must integrate with whichever solution you select. Luckily, there are [numerous intuitive shopping carts](https://support.payjunction.com/hc/en-us/sections/202136258-Shopping-Cart-Systems) that offer a quick setup for your business, along with dozens of gateway options. Some flexible and easy-to-use shopping carts include ONTRAPORT, 3dcart, Ecwid and CS-Cart. Card-present transactions are far simpler. The best way to streamline your e-commerce transactions is by opting for an all-in-one service and selecting an integrated shopping cart that’s simple to use and covers your needs. ## Security Any business or organization that processes, stores or transmits cardholder data falls under [PCI scope](https://blog.payjunction.com/pci-scope-defined/). Protecting your cardholder data is imperative to your business’s success, as a breach will cost you repeat customers and future business. These PCI considerations apply to all providers who assist with your credit card transactions, so vet your Payment Gateway provider, Merchant Service Provider and online shopping carts for their PCI readiness. The security standards to maintain PCI compliance change every year, so a provider who was PCI Level 1 before may now no longer be as secure as necessary. Look for providers with a continued [track record of PCI Level 1 compliance](https://blog.payjunction.com/payjunction-security-pci-dss-compliance/). This will help you feel secure in selecting them as your provider, as they’ve shown a consistent commitment to meeting the highest security requirements established by the card brands. ## On the fence about accepting online payments? ## [![LEARN ABOUT THE BENEFITS](https://hubspot-no-cache-na2-prod.s3.amazonaws.com/cta/default/635739/4aef24b3-b148-45b0-9dc1-fac70e7eb14e.png)](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/635739/4aef24b3-b148-45b0-9dc1-fac70e7eb14e) Do you accept online payments? What do you like or dislike about your current gateway provider? What questions do you have? We’d love to hear from you! *Editor's Note: This post was originally published in November 2018 and has been updated for comprehensiveness and accuracy.* [E-Commerce](https://blog.payjunction.com/topic/e-commerce) [Questions and Answers](https://blog.payjunction.com/topic/questions-and-answers) --- ##### [![An Expert Guide to Recurring Payment Processing](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/recurring-payment-processing.svg) An Expert Guide to Recurring Payment Processing](https://blog.payjunction.com/recurring-payment-processing) ##### [![5 Tips for Hassle Free eCheck Payment Processing](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/echeck-payment-processing.svg) 5 Tips for Hassle Free eCheck Payment Processing](https://blog.payjunction.com/echeck-payment-processing) ###### About Author ![Picture of Christina Lavingia](https://blog.payjunction.com/hs-fs/hubfs/Christina%20Lavingia%2c%20Content%20Marketing%20Manager.jpg?width=200&height=200&name=Christina%20Lavingia%2c%20Content%20Marketing%20Manager.jpg) ### Christina Lavingia Christina Lavingia delights in crafting content that helps business owners fight fraud, reduce risk and process payments with ease. ###### Related Posts ## [![Payment Gateway Providers: What to Look for When Comparing](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/payment-gateway-providers.svg) Payment Gateway Providers: What to Look for When Comparing If you operate an online store, you must have a Payment Gateway. A Payment Gateway enables the processing of card-not-present transactions online. It is one of the many payment providers you’ll use to accept credit cards.](https://blog.payjunction.com/payment-gateway-providers) ## [![What Is PCI Compliance? PayJunction Security Explained](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/payjunction-security-pci-dss-compliance.svg) What Is PCI Compliance? PayJunction Security Explained PayJunction provides business owners with helpful features like cards on file and electronic signature capture. These features go above and beyond the old-school technology many businesses still use, but they naturally lead business owners to ask, “How is this secure?” They may also ask themselves, "What is PCI compliance?"](https://blog.payjunction.com/payjunction-security-pci-dss-compliance) ## [![Foodeaze and PayJunction Offer Online Payment Processing for New York Restaurants](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/foodeaze-payjunction-integration.svg) Foodeaze and PayJunction Offer Online Payment Processing for New York Restaurants Starting a business isn’t easy, and restaurants are no exception. It’s one thing to hire talented staff, design a delicious menu that fits your local market and customer preferences, and spruce up a retail location. It’s another, though, to then scale your business with multiple locations, delivery options and an online presence.](https://blog.payjunction.com/foodeaze-payjunction-integration) ## Meet a Payment System You’ll Love - ###### FEATURES [No-code Payments Integration®](https://www.payjunction.com/payments/no-code-payments-integration.html) [ZeroTouch Terminal](https://www.payjunction.com/payments/smart-terminal.html) [Portable Terminal](https://www.payjunction.com/payments/portable-credit-card-reader-terminal.html) [Invoices](https://www.payjunction.com/payments/electronic-invoices.html) [ACH](https://www.payjunction.com/payments/ach-payments.html) [SmartSurcharge®](https://www.payjunction.com/payments/smart-surcharge.html) [Cards on File](https://www.payjunction.com/payments/store-credit-card-info.html) [Recurring Billing](https://www.payjunction.com/payments/recurring-payments.html) - [Ecommerce](https://www.payjunction.com/payments/ecommerce-merchant-services.html) [Customization](https://www.payjunction.com/payments/custom-payment-software.html) [Remote Signatures](https://www.payjunction.com/payments/signature-capture.html) [Rapid Refunds](https://www.payjunction.com/payments/credit-card-refund.html) [Multi-Location](https://www.payjunction.com/payments/enterprise-payments.html) [Sales Reports](https://www.payjunction.com/payments/sales-reports.html) [Search and Export](https://www.payjunction.com/payments/transaction-history-search.html) [Mobile App](https://itunes.apple.com/us/app/payjunction/id1324839420?ls=1&mt=8) - ###### BUSINESS SOLUTIONS [Auto Dealers](https://www2.payjunction.com/automotive-merchant-services) [Veterinary](https://www2.payjunction.com/payment-processing-veterinarians) [Dentistry](https://www2.payjunction.com/payment-processing-dentists) - ###### RESOURCES [Product Overview](https://www.payjunction.com/payments/payment-processing-solutions.html) [Integrations](https://integrations.payjunction.com/) [Blog](https://blog.payjunction.com/) [Guides](https://guides.payjunction.com/) [Support](https://support.payjunction.com/) [Service Status](https://status.payjunction.com/) [Tutorials](https://blog.payjunction.com/tag/pj-university/) [API](https://www.payjunction.com/payments/payment-api.html) - [Trust Center](https://trust.payjunction.com/) [Request a Demo](https://www2.payjunction.com/payjunction-demo) [Pricing](https://www.payjunction.com/payments/pricing.html) [About Us](https://www.payjunction.com/payments/about.html) [Careers *HIRING*](https://www2.payjunction.com/careers) [Press](https://media.payjunction.com/) - ###### RESOURCES [Integrations](https://integrations.payjunction.com/) [Guides](https://guides.payjunction.com/) [Tutorials](https://blog.payjunction.com/tag/pj-university/) [API](https://www.payjunction.com/payments/payment-api.html) [Request a Demo](https://www2.payjunction.com/payjunction-demo) [About Us](https://www.payjunction.com/payments/about.html) [Careers *HIRING*](https://www2.payjunction.com/careers) [Press](https://media.payjunction.com/) [Trust Center](https://trust.payjunction.com/) [Service Status](https://status.payjunction.com/) - ###### BUSINESS SOLUTIONS [Auto Dealers](https://www2.payjunction.com/automotive-merchant-services) [Veterinary](https://www2.payjunction.com/payment-processing-veterinarians) [Dentistry](https://www2.payjunction.com/payment-processing-dentists) ##### 800-601-0230 SIGN UP FOR OUR NEWSLETTER  Become a better advocate for your business. 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