What Is a Payment Gateway?
By Ajeet Khurana. Ecommerce Expert
Ajeet Khurana is an author, educator, mentor, angel investor, and speaker for ecommerce and online business. As a lecturer at the University of Texas at Austin, he taught ecommerce back in 1993, when the term "ecommerce" had not yet been coined. Read more about his profile on Google+: Ajeet Khurana .
Question: What Is a Payment Gateway?
The payment gateway is a software application. To draw an analogy, think of the credit card swipe machine at the checkout counter. Akin to the swipe machine, the payment gateway:
- processes a transaction securely
Types of Payment GatewaysThere are two primary types of payment gateways based on the location of the transaction processing code:
- Merchant Side API
This is a more common implementation. It redirects customers to the website of the payment gateway provider. After the payment is processed, the customer is returned to the ecommerce merchant's website.
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You need to ensure that the technology platform required for the payment gateway is compatible with your shopping cart's technology.
Detecting fraud is a moving target. Make sure to read up the latest about who is winning this perpetual battle.
There is some merit to the notion that payment gateways have become a commodity service. As a result your decision should certainly be influenced by the pricing.
Some payment gateway providers such as PayPal and Google Checkout are simple to implement, but do not permit a high degree of customization. Others are more complex, but can be customized to your needs.