Payment Gateway is a service that processes credit card payments for online and traditional retail stores, securely transmitting transaction data between merchants and banks.
Payment gateways encrypt sensitive card data and facilitate authorization between the customer's bank and the merchant. Popular options include Stripe, PayPal, and Square. When choosing a gateway, consider transaction fees (typically 2.9% + $0.30), supported payment methods, international coverage, and PCI compliance.
Every percentage point in transaction fees directly impacts your bottom line. On $1M in annual sales, the difference between 2.4% and 2.9% fees is $5,000/year. It's worth negotiating or shopping around.
A subscription box company uses Stripe to handle recurring billing across 40 countries. Stripe automatically manages currency conversion, retries failed payments, and handles PCI compliance — things that would take an engineering team months to build.
Payment gateways and payment processors aren't the same thing. The gateway encrypts and transmits card data; the processor actually moves the money between banks. Many modern services like Stripe combine both.
Negotiate your rates once you hit $50K/month in volume. Most payment gateways offer custom pricing for high-volume merchants — but only if you ask.
Payment Gateway falls under the E-commerce category. Explore related tools in our Best Payment Processing.
These tools put payment gateway into practice. Compare features, pricing, and ratings:
Software that enables businesses to build, manage, and operate online stores, handling product catalogs, shopping carts, checkout, and order management.
When a customer adds items to their online shopping cart but leaves the site without completing the purchase. Average abandonment rates are around 70%.
The average amount spent per order. Calculated by dividing total revenue by the number of orders. A key metric for e-commerce optimization.
Now that you understand Payment Gateway, explore the best tools in this category.