Payment Gateway
A payment gateway is a technology that facilitates online payment processing by securely transmitting transaction data between a merchant's website or application and the payment processor. It acts as an intermediary, encrypting sensitive information such as card details to ensure secure online transactions. While payment service providers (PSPs) and payment gateways are both integral to processing online payments, and some businesses such as Modulr are able to perform both roles, there are important differences between the two. A payment gateway is a technology that facilitates the authorisation of (generally) card payments by acting as an intermediary, ensuring that sensitive payment data like card numbers and personal information is encrypted and securely passed from the customer to the bank. The gateway won’t settle or process payments, it is purely a technology facilitating authorisation and secure transmission. A PSP, meanwhile, will likely offer transaction processing, fraud detection or alternative payment methods, overseeing the entire payment lifecycle from start to finish. Some providers, such as Modulr, also offer accounts for payments to be made into, rather than simply directing funds onwards to another account elsewhere, ensuring that funds remain inside a single ecosystem and enabling finer control over payment processing.A payment gateway is a technology that facilitates online payment processing by securely transmitting transaction data between a merchant's website or application and the payment processor. It acts as an intermediary, encrypting sensitive information such as card details to ensure secure online transactions. While payment service providers (PSPs) and payment gateways are both integral to processing online payments, and some businesses such as Modulr are able to perform both roles, there are important differences between the two. A payment gateway is a technology that facilitates the authorisation of (generally) card payments by acting as an intermediary, ensuring that sensitive payment data like card numbers and personal information is encrypted and securely passed from the customer to the bank. The gateway won’t settle or process payments, it is purely a technology facilitating authorisation and secure transmission. A PSP, meanwhile, will likely offer transaction processing, fraud detection or alternative payment methods, overseeing the entire payment lifecycle from start to finish. Some providers, such as Modulr, also offer accounts for payments to be made into, rather than simply directing funds onwards to another account elsewhere, ensuring that funds remain inside a single ecosystem and enabling finer control over payment processing.
Applications
E-commerce:
Reduces fraud in online card payments by verifying the cardholder's identity
E-commerce:
Reduces fraud in online card payments by verifying the cardholder's identity
Advantages
- Enhanced security: Reduces unauthorised transactions by verifying that the genuine account holder is authorising the payment
- Enhanced security: Reduces unauthorised transactions by verifying that the genuine account holder is authorising the payment
Challenges
- User Experience: Additional authentication steps can cause friction and increase checkout abandonment
- User Experience: Additional authentication steps can cause friction and increase checkout abandonment
