EVERY business needs a payment gateway. Whether you’re an e-Commerce, brick and mortar, or hybrid business, a gateway is essential for accepting any digital or electronic payments made online and in-store at the Point of Sale (POS).
What is a Payment Gateway?
A payment gateway is a software program that sits between the merchant and their customer. It’s often described as ‘an electronic cash register for the virtual world.’ Payment gateways offer a secure pathway that requests and manages transactions to transfer money between a customer and a merchant’s bank account.
FreedomPay is the world’s largest independent payment gateway, with many additional capabilities!
What Does a Payment Gateway Do?
A modern payment gateway has three essential roles:
1. Encryption
First, the gateway encrypts payment data through tokenization for secure transfer between the seller and the buyer.
2. Authorization
Next, it sends a payment request to the payment processor for authorization via the credit card or financial institution associated with the payment method. This allows the website or POS to move onto confirmation, receipt, or the next action in the sales journey.
3. Settlement
Finally, it settles the payment, completing the transaction and facilitating the transfer of funds between the buyer and seller.
Some payment gateways, like FreedomPay, go beyond basic functions—they offer advanced features like order screening, tax calculation, geolocation services, and robust dashboards for analyzing transaction data and payment performance.
How Does a Gateway Help My Business?
Payment gateways are crucial for both enhancing customer experience and improving business operations:
For Customers
- A seamless and secure checkout experience—online, in-app, or in-store.
- Instant payment confirmation, reducing friction in the sales process.
For Merchants
- The right payment gateway provides fast and efficient transaction processing to reduce delays.
- Payment acceptance and rejections prevent unnecessary chargeback fees.
What about PCI compliance?
Using a secure payment gateway reduces the compliance burden on your business. Gateways like FreedomPay, which are PCI-P2PE, GDPR, and PSD2-SCA compliant, assume responsibility for sensitive data management. This eliminates the need for merchants to handle sensitive payment information directly, minimizing security risks and simplifying compliance requirements.
Is a gateway the same thing as a processor?
While there are similarities, payment gateways and processors play distinct roles in payment processing:
- A payment gateway is the system that encrypts data, authorizes the payment, and supports settlement.
- A payment processor is a specific step within the payment chain, tasked with transmitting transaction data to financial institutions for authorization.
Both components work together to ensure smooth, safe transactions across multiple payment networks.
Payment Gateways and Aggregators for Online Payments
For online payments, businesses need two critical components:
- A payment gateway to securely process transactions across all channels.
- A merchant account or aggregator (e.g., PayPal) to process card-based payments.
Some aggregators include a built-in payment gateway, providing an all-in-one solution for merchants. A single gateway can support online, mobile, and in-store transactions, ensuring harmonious integration across all payment platforms. A gateway must be compatible with the shopping cart to integrate with the aggregator, so you may need to set up your shopping cart and aggregator before your payment gateway.
A powerful commerce investment
FreedomPay stands apart as the world’s largest independent payment gateway, delivering unmatched capability and innovation for businesses of all sizes:
- Independence & Flexibility: You’re never locked into one processor or payment method—adapt to industry trends on your terms.
- World-Class Security: Advanced encryption and tokenization ensure maximum transactional safety.
- Scalable Solutions: Whether you’re a startup or an established enterprise, our platform grows with your business.
Take your operations to the Next Level with FreedomPay’s secure, world-class platform. Drive revenue, streamline processes, and create unmatched customer experiences.
Final Thought
A payment gateway is more than a transactional tool—it’s your partner in building a customer-friendly, future-proof business. Learn how FreedomPay’s advanced technology can transform your payments.
