A payment gateway is an online service that authorises credit card transactions across the internet. If you’re running an eCommerce website, and you want to accept credit cards, you’ll need an account with a payment gateway. It is essentially the link between your website and the bank. The payment process is as follows:

1. A customer visits your website. They add items to the cart and proceed to the checkout.
2. The customer fills in their details, including credit card details and submit them.
3. Specialised code in your website sends the details to the payment gateway.
4. The payment gateway communicates the details to the bank’s processor. If all goes well, money is moved from the customer’s account into your internet merchant account.
5. The bank’s processor sends information about the transaction back to the payment gateway.
6. The payment gateway sends data about the transaction back to the website.
7. Code in the website processes this data and displays the results to the customer.

Steps 3 – 6 are invisible to the customer and that’s the way you want it to be.

Setting up a Payment Gateway

If you’re going to use a payment gateway, you’ll usually also need an internet merchant account. This can be subscribed for separately, though some payment gateway companies offer a package which includes the payment gateway and internet merchant account.

A few common payment gateway providers are:

• eWay – Australian owned
• Pin Payments
• SecurePay
• Stripe – We use Stripe to process our client invoices.

Additionally, banks often offer their own payment gateways. The payment gateways of the top three Australian banks are:

• ANZ eGate
• NAB Transact
• CommWeb

Payment gateways charge a fee for their service. This is usually a small flat fee per transaction plus a small percentage of the transaction amount. Some payment gateways also charge a flat yearly or monthly fee.

Once you’ve signed up, you’ll need to add some code to your website to communicate with the payment gateway. This code is usually provided as part of website eCommerce software or by the payment gateway company. Sometimes we have to write it ourselves.

Additionally, most payment gateways and internet merchant accounts will require you have an SSL certificate installed on your website to encrypt communication between your customer and your website. We recommend you obtain an SSL certificate, whether or not it’s strictly necessary. However, if you’re operating on a shoestring budget this is an extra cost you can avoid if you choose a payment solution that doesn’t require it.

Third Party Payment Processors

An alternative to using a payment gateway is signing up for a third party payment processor (TPP) like PayPal. They have the advantage of not requiring an internet merchant account and being easier to set up. The trade-off is that your customer will need to be redirected to the TPP site to complete the transaction, adding extra steps for the customer and pulling them out of the immersion of your website branding.

Find Out More

Read more about payment gateways at these resources.

• Wikipedia’s payment gateway article.
• Australian payment gateway reviews