A payment gateway service is an e-commerce application service provider that can authorize payments by credit card for online businesses or retailers. A payment gateway service acts as a mediator between the payer and the payee. Essentially, payment gateways facilitate communication between banks, specifically between the acquiring bank and the issuing bank. Typically The typical payment gateway service will facilitate quite a number of tasks to process a transaction.

1. The first step is when the customer actually places the order on the website or uses an automated telephone service to buy a product.
2. If the purchase is from a website, the web browser will encrypt the information to keep it secure and send it to the merchant. Security is a huge part of payment gateway services because they are dealing with
3. The merchant will then forward the details of the transaction to their payment gateway. This is another encrypted connection to ensure secure payment processing. This is done by the payment gateway.
4. The payment gateway then forwards on the transaction to a payment processor.
5. This step involves the payment processor forwarding the transaction to the card association whether it be Visa or MasterCard etc.
6. The credit card issuing bank must receive an authorization request and then send a response to the processor with a message saying approved or denied. The response code is also used to explain why the transaction was denied if it is.
7. The payment processing company will then forward whatever the authorization response is to the payment gateway.
8. Once the payment gateway receives a response I will forward it on to the website where is it is then sent back to the merchant and the cardholder so they can also know the response.
9. At this point the merchant will fulfill the order and the whole process is repeated again but this time to clear the authorization by confirming the transaction.
10. Now the merchant can submit their approval to the bank for payment.
11. The bank will make the payment at the request of the credit card holder and will deposit the total into the merchants account.

This may seem like a lot of steps but most of it is done automatically and the first half only takes maybe two or three seconds but the depositing of the physical funds can take two or three days to process. In the midst of all of this many payment gateway services will also offer tools that will automatically screen for fraud activity and also calculate tad before the authorization request is sent to the processor.

Payment gateway services are very important to the facilitating or security of making purchases online. They are why it is even possible.