E-commerce Credit Card Payment Gateway

Ever wondered what payment gateway is? well its an e-commerce service application which allows payments for online transactions/retailers and e-business. There are several payment gateway platforms, but for now, we will only discuss what payment gateway is and how it works.

When you go to a shopping mart, you pay for your items selected at a specific physical point of sale terminal. Payment gateway executes the same purpose. It is an online ‘point of sale terminal’ for your web transactions or web shopping.

One must also be wondering, is such procedure secure and reliable? well absolutely. Payment gateway protects and secures your personal and sensitive information details such as credit card number and payment processor information.


The question how payment gateway works and what role does it play in e-commerce, has a simple answer. To be specific, payment gateway is a source of information transfer between any payment portal and a Front End Processor.

The aforementioned payment portal may include any website, your mobile phone, or any IVR service. When you place an order or directly purchase anything through your payment portal, the command is sent through a SSL encryption (in case of a website).

The concerned merchant then forwards the order or transaction details to their respective payment gateway which is also done through SSL encryption. Now comes payment gateway’s real task. Payment gateway then forwards the received transaction details to the Front End Processor i.e. merchant’s acquiring bank.

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The Front End Processor then transfers details to the respective card association which is basically the credit card service you select (MasterCard, Visa, etc.) On approval, the credit card association sends back information to payment gateway.

Payment gateway then finally approves the transaction at payment portal. This whole process though seems to be very long but in fact it takes a maximum of 2 to 3 seconds. In short, if there is absence of payment gateways, no e-commerce and no e-business!

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