What is Payment gateway?

A payment gateway is a technology that reads payment cards and transmits customer data to the merchant acquiring bank for processing.

A payment gateway is a piece of technology that merchants use to accept debit or credit card payments from customers. The term refers to both physical card-reading devices found in physical retail stores and payment processing portals found in online stores. However, in recent years, brick-and-mortar gateways have begun to accept phone-based payments via QR codes or Near Field Communication (NFC) technology.

It is an important part of the electronic payment processing system because it is the front-end technology that sends customer information to the merchant acquiring bank, where the transaction is then processed.

Payment gateway technologies are constantly evolving to reflect new consumer preferences and technological capabilities. Previously, credit card terminals used magnetic strips and required paper signatures from customers. The signature phase could be replaced by a personal identification number (PIN) entered directly into the payment gateway hardware as chip technologies advance. Contactless purchases are now available, with many customers opting to use their phones as payment devices rather than plastic credit cards.

It’s architecture will differ depending on whether it is an in-store gateway or an online payment portal. Application programming interfaces (APIs) will be required for online payment gateways, allowing the website in question to communicate with the underlying payment processing network. In-store gateways for payment will use a POS terminal that electronically connects to the payment processing network via a phone line or an Internet connection.