What is a Payment Gateway?

A payment gateway authorizes transactions, securely encrypts them, and submits them for processing. In the case of a direct-debit or electronic check transaction, a funds request is sent to the payers bank and if sufficient funds are available, the funds are deposited into the payee’s bank account. For credit card transactions, an authorization request is sent to the card-issuing bank. The transaction is then submitted to the credit card processor who deposits the funds into the merchant’s checking account.