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The essential guide to payment gateways
Behind every cashless payment is a sophisticated network of processes and software, ensuring transactions travel from the consumer to merchant in seconds.
October 10, 2024 | 8 mins read
What is a payment gateway?
Behind every cashless payment is a sophisticated network of processes and software, ensuring an online transaction travels from the consumer to merchant in seconds. A payment gateway is part of this process and, for online businesses, its reliability is essential.
How it works
Whether you're just getting started with online payment processing or looking to enhance your current setup, it's important to know how they work and why they're essential for businesses aiming to succeed in a digital marketplace.
- Process customer paymentsAs part of the payment process, a payment gateway is the first step in a transaction. It's a service that connects your business's online store to a financial institution that can process customer payments.
- Secure transactionsPayment gateway service providers help merchants accept payments from customers, encrypting the payment information and sending an authorisation request to the payment processor to confirm that funds are available.
- Key part of online businessesIf the transaction is approved, funds are allocated, and confirmation is sent back through the payment gateway to the merchant. Whether customers are buying from a website, app or store, are a key part of digital payments, ensuring fast and secure transactions.
Key components
Customer checkout page
Website integration
Data security
Connection to banks
Business dashboard
Tools
The customer-facing interface during checkout, like a secure payment page
Connection with your website, e-commerce platform or point-of-sale system to communicate with your store's backend
Built-in encryption and security features to protect sensitive customer data
Link to payment processors and banks that authorise transactions
A dashboard to track payments, manage refunds and view payment statuses
Plugins or apps to help you set it up on your site or app
Functions of payment gateways
- Collect payment detailsWhen a customer makes a purchase, the payment gateway collects their payment information — whether it's card details, digital wallet info, or bank transfer data.
- Encrypt customer informationTo keep customer data safe, the payment gateway scrambles (or encrypts) the information so that sensitive information can't be accessed by anyone unauthorised.
- Transfer payment detailsThe gateway securely transfers the payment data from your website or point-of-sale system to the relevant bank or card provider.
- Verify and authorise the paymentThe payment gateway checks with the customer's bank to verify the details and ensure there are enough funds or credit available to complete the online transaction.
- Respond and complete the transactionOnce the payment is authorised, the gateway sends a confirmation back to your website or system, completing the transaction for the customer.
Types of payment gateways
Some payment gateway solutions handle the entire transaction process directly, while others act as a proxy, routing payment details to a third-party processor. Using a proxy server for online transactions reduces your responsibility as a merchant for managing sensitive customer data.
Hosted
Self-hosted
API
Local bank integration
Platform-based
Description
A third-party service that redirects customers to a separate payment page to complete the transaction
The payment form is hosted on your own website, but the payment data is sent to a third-party service for processing
The to allow businesses to design a fully customised payment system
Connect directly with your bank's payment gateway
Comes pre-integrated with e-commerce platforms
Transaction speed
Slower due to redirection to an external site
Dependent on merchant's website but generally fast
Fast
Varies by bank; there may be a delay due to bank processing times
Fast
Good for
Small to medium-sized businesses wanting easy setup and reduced PCI compliance responsibilities
Medium to large businesses looking for greater control over payment processes
Businesses with development resources needing customisable payment solutions
Businesses in markets that prefer bank-backed payment options
Businesses using specific e-commerce platforms
Pros
- Easy setup, little technical expertise required
- Good security features, the provider handles security and compliance
- Customers trust well-known third-party providers
- Customisable, with full control over the payment experience and branding
- Customer stays on your website for a seamless experience
- Complete control over design and functionality
- Customer stays on your website for a smoother checkout
- Scalable for businesses looking to grow and adapt their payment system
- Direct link to bank simplifies settlements and banking processes
- Banks may offer more competitive rates
- Minimal integration work, as the gateway is built into the platform
- Everything from payments to order tracking is managed in one place
Cons
- Less control, with limited customisation and branding options
- Redirecting customers to a different page can be disruptive and lead to cart abandonment
- Fees may be higher compared to other options
- Higher responsibility as you'll need to manage security, regulations and handling customer data
- Requires more maintenance, often needing development support
- Setup requires development skills and ongoing maintenance
- You're responsible for ensuring data security and regulatory compliance
- Less flexibility and fewer payment methods available compared to other gateways
- Not ideal for businesses looking to expand globally
- Limited to the features and pricing of the e-commerce platform
- Harder to switch providers
- Higher fees compared to standalone options
Understanding payment gateways, processors and terminals
To understand the different roles a payment gateway, payment processor and payment terminal play, think of the gateway as initiating and securing the transaction, while the processor handles the transfer of funds. The terminal is a physical device that allows in-person payments in a retail or point-of-sale (POS) setting.
A payment gateway service is responsible for collecting card details from the customer, ensuring the information is encrypted and securely transmitted to the processor. Once the information is transferred, the payment processor takes over, managing the actual transfer of funds between the customers' bank and the merchant account.
The terminal captures information from the customer's card, either through a swipe, chip or tap, and passes the information to the payment gateway or processor.
Merchants will work with payment service providers for gateways, terminals and processing services. Together, these systems ensure card details are collected, secured and processed, allowing merchants to accept payments with ease.
Managing international transactions
Not all payment gateways accept international payments. One of the biggest challenges when managing multiple currencies is dealing with fluctuating exchange rates and potential conversion fees. Cross-border payments can also be more expensive due to higher transaction fees and extra banking costs.
A provider that can handle cross-border transactions and alternative payment methods will allow your business to accept orders from customers worldwide, regardless of location or currency. This is especially important as global e-commerce continues to grow and customers expect a seamless experience, no matter where they're shopping. According to a recent survey, purchase from overseas retailers. Here's how a provider can help.
- Multi-currency paymentsAllows customers to pay in their preferred currency, leading to higher conversion rates.
- Payment methodsAccepts a wide variety of payment methods. Customers from different countries and regions have unique preferences for how they pay – whether that's credit card, debit card, digital wallet or bank transfer.
- Compliance and securityHas built-in security features and ensures compliance with local laws and regulations such as GDPR in Europe or PCI DSS globally.
- Fraud preventionFeatures advanced fraud detection algorithms and risk management systems to identify suspicious activity and protect both businesses and customers, as increases.
How to choose the best payment gateway
There's no one-size-fits-all payment service when it comes to choosing the best provider. It all depends on your specific business model, the regions you operate in and your customers' needs. Some come with just the basics, while others have extra features. Key points to consider, however, include:
- Integration with existing technologies/websiteThe best payment gateway provider for your business will work seamlessly with your existing technologies, such as your website, e-commerce platform, shopping cart, or point-of-sale system. Some gateways offer simple, plug-and-play options that require minimal technical setup, while others offer more advanced API integration for businesses looking to fully customise their checkout experience.
- International transactionsIf your business operates globally or plans to expand into international markets, you'll want to consider one that supports international payments and currencies. Look for gateways that offer multi-currency support and local payment methods, as well as transparent cross-border fees. A payment provider that specializes in international transactions will help you avoid unexpected costs and offer a smooth experience for customers paying in different currencies.
- FeesFees vary significantly between different payment service providers, so it's important to evaluate the costs. Some gateways charge a flat fee per transaction, while others may take a percentage of each sale. There may also be extra costs for services like currency conversion, fraud detection or refund processing, as well as setup fees. Look beyond the cheaper options though – a more expensive gateway could offer exceptional customer service or advanced features that ultimately save time and money by preventing fraud or reducing transaction failures.
- Compliance and securityThe best payment provider for your business will comply with industry regulations, such as PCI DSS (Payment Card Industry Data Security Standard), and provide encryption to protect sensitive customer information, like card details. If you operate in different regions, it's crucial to choose a gateway that can handle the varying regulatory requirements. Gateways with built-in fraud detection tools and chargeback management can provide added layers of protection.
- Customer experienceYour payment gateway strongly influences the customer experience. A confusing or slow checkout process can lead to cart abandonment, while a fast, user-friendly experience removes friction and improves conversion rates. Factors that will impact the experience for customers include a streamlined interface, the ability to save payment details and offering payment methods familiar to your customers.
- Payment typesThe more options you can offer consumers when it comes to payment methods, the more likely you are to capture sales from a broader audience. The best gateway for your online business will support a range of payment types, including major credit cards, debit cards, digital wallets like Apple Pay and Google Pay, and local payment methods specific to the regions you serve.
Popular payment gateways
- On-siteThese keep customers on your website for the entire payment process.
- OffsiteThese host the payment form on your site but send the payment for processing on external servers.
- RedirectThese redirect customers to another website to complete the payment process.
How to set up a payment gateway
If you have the technical know-how, you can create your own payment gateway. In the long run, this ends up being the most cost-effective option if your business processes a large number of transactions per day, since you'll bypass some of the fees that come with payment processing.
But for most merchants, a plug-and-play solution is the easiest way to get your e-store up and running.
- Choose the right payment gateway providerFees, payment methods, integration and your own technical resources should all play a part in your decision.
- Create a merchant accountFor most payment gateways, you'll need to create a merchant account, which allows you to accept and hold payments before they're deposited in your business bank account.
- Integrate the gateway with your website or platformMany gateways offer plugins or extensions that make this easier, especially if you're using popular platforms like or Magento.
- Configure security featuresPayment gateways have various security measures but you'll still need to configure certain settings such as SSL certificates and PCI DSS compliance.
- Set up payment methods and currenciesDecide which payment methods you want to offer customers (credit/debit cards, digital wallets), and configure the necessary options within your gateway. If you plan to accept international transactions, make sure you've enabled multi-currency support.
- Test the payment gatewayMost providers offer a testing environment where you can simulate transactions without actually charging customers.
- Go live and monitor performanceAfter launch, keep an eye on how the payment gateway is performing. Track transaction success rates, monitor for any customer issues, and ensure security measures remain up to date. As your online business grows, you may need to adjust or upgrade your payment gateway to handle increased transaction volumes or add new features.
Future trends in payment gateways
Payment gateways are stepping up to meet the demands of an ever-evolving e-commerce landscape. As , gateways are getting smarter at handling recurring payments, keeping transactions rolling for businesses and customers alike. Meanwhile, innovations like biometric authentication – fingerprint scans or facial recognition – are making checkouts even faster. And AI-driven fraud management solutions are working behind the scenes to stop fraud before it starts.
As the lines between online and offline shopping blur, consumers increasingly expect omni-channel payment options that let them switch effortlessly between in-store and digital checkouts.
All these innovations are pointing to a future where and more secure, to cater to the for easy, flexible payment options. One where digital wallets, one-click payments, and even cryptocurrency are becoming the norm.
Antom's payment gateway solution
Today's online businesses need payment gateways that are not only fast and secure but also flexible enough to handle the increasing complexity of global transactions. Having the right gateway solution is critical to staying competitive.
At Antom, our payment solutions are designed with modern businesses in mind. We partner with merchants in Asia, the USA, Europe, Latin America and the rest of the world, offering the best payment gateway solutions for global transactions.
- Suited for global paymentsGive customers the flexibility to pay in their local currency. With a single integration, you can offer the payment methods international customers prefer.
- Accept a variety of payment optionsWhether your customer prefers credit card payments, e-wallets or local payment methods, you can accept them all and increase your payment success rate.
- Protect your business with advanced security measuresStay compliant and reduce risk with the latest real-time security measures that helps keep transactions safe.
We're here to support you in finding the best payment solutions for your needs. to discuss how Antom can help enhance your payment systems and drive your business forward.
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