How does a Payment Gateway work?

The operation can be categorized as two separate entities depending on whether it is an in-store payment or an online payment. The following stakeholders are involved in transacting payments from the customer account to the merchant account. The payment service provider/payment processor serves as a pivotal third-party intermediary in the transaction process. Their primary function encompasses a range of services, such as providing the payment gateway itself, overseeing payment processing, and offering supplementary services relevant to transactions. Beyond this foundational role, they meticulously manage the intricacies of payment processing, ensuring seamless and efficient transfer of funds from the customer’s account to the merchant’s account. Additionally, they extend their expertise to offer a spectrum of supplementary services tailored to enhance the transaction experience, covering aspects like fraud prevention, dispute resolution, and transaction analytics. A merchant is any individual or organization that sells goods or services. A customer is an individual who purchases goods and services from the merchant. Issuer and issuer’s bank is a financial institution that processes payment on behalf of the customer. Acquirer’s bank is a financial institution that processes card payments on behalf of the merchant A payment gateway is a service used by merchants and customers to check and transact funds and their related data among each other.