Payment Gateway
Technology that securely transmits payment information between merchants and payment processors.
Definition
A payment gateway is the technology service that captures and transfers payment data from the point of sale (website, invoice payment page, or terminal) to the payment processor. It encrypts sensitive card data, routes transactions, returns authorization responses, and handles security compliance.
Payment gateways are essential for online payments. Popular gateways include Stripe, PayPal, Square, and Authorize.net. They integrate with websites, invoicing systems, and e-commerce platforms via APIs or plugins.
Why It Matters
Choosing the right payment gateway affects customer experience, security, and costs. Gateways differ in supported payment methods, international capabilities, integration complexity, and pricing. Some charge flat per-transaction fees; others take percentages.
For invoicing software, gateway integration determines how easily clients can pay online. A smooth, branded payment experience increases the likelihood of prompt payment.
Examples
- 1
An invoicing system integrates with Stripe, allowing customers to click a "Pay Now" link and securely enter card details on a branded payment page.
- 2
A SaaS company uses a payment gateway that supports ACH, cards, and Apple Pay, giving customers multiple convenient payment options.
- 3
A business selects a gateway with recurring billing features to automate monthly retainer payments from clients.
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