How does a payment gateway work

[chushpan]

What is a payment gateway?​

A payment gateway is a technological system or software that ensures the secure transfer of payment data between the customer, the merchant, and banks. A payment gateway acts as an intermediary in the transaction processing process, allowing merchants to accept online payments via bank cards, e-wallets, and other payment methods.

How does a payment gateway work?​

The payment gateway process can be divided into several stages:

1. Payment initiation​

When a customer decides to make a purchase, they select a payment method (e.g. credit card, PayPal, Apple Pay). The process begins with sending payment details.

1. Entering customer data:
   • The customer enters his card details (card number, expiration date, CVV) on the payment page.
   • This data can be entered directly on the merchant's website or redirected to the payment gateway page.
2. Data encryption:
   • The payment gateway encrypts card data using security protocols (e.g. TLS/SSL) to protect it from interception.

2. Transferring data to the acquiring bank​

Once the data is collected, the payment gateway sends it to the acquiring bank, which processes the transactions on behalf of the merchant.

1. Checking card details:
   • The gateway checks the correctness of the data format (e.g. card number, expiration date).
2. Sending authorization request:
   • The acquiring bank sends an authorization request to the payment system (Visa, MasterCard, etc.).

3. Payment authorization​

Authorization is the process of verifying the authenticity of the card and the sufficiency of funds in the customer's account.

1. Request to the issuing bank:
   • The payment system sends a request to the issuing bank (the bank that issued the client's card).
2. ARQC generation (cryptogram):
   • If an EMV card is used, an ARQC is generated to verify the authenticity of the card.
3. Authorization decision:
   • The issuing bank checks the card balance, limits and other parameters.
   • If everything is OK, the bank sends a positive response (ARPC).

4. Completing the transaction​

After successful authorization:

1. Client Notice:
   • The client receives a notification about successful payment (for example, a message on the screen or email).
2. Saving transaction data:
   • The payment gateway stores the transaction data for further processing.
3. Transferring data to the merchant:
   • Transaction information is passed to the merchant to update the order status.

5. Clearing​

After the transaction is completed, the cleaning process occurs:

1. Transferring data to the payment system:
   • The merchant sends data about all completed transactions to the payment system (for example, Visa or MasterCard).
2. Payment processing:
   • The payment system checks the data and sends it to the issuing bank.
3. Transfer funds:
   • The issuing bank transfers money to the acquiring bank's account.
   • The acquiring bank credits funds to the merchant's account (usually within 1–3 days).

Main functions of the payment gateway​

1. Safety:
   • Encryption of card data (TLS/SSL).
   • Compliance with PCI DSS (Payment Card Industry Data Security Standard).
2. Support various payment methods:
   • Bank cards (Visa, MasterCard, American Express).
   • Electronic wallets (PayPal, Apple Pay, Google Pay).
   • Cryptocurrencies (in some cases).
3. Integration with websites and applications:
   • API for connecting to a website or mobile application.
   • Widgets for quick integration.
4. Multicurrency:
   • Support for payments in different currencies.
   • Currency conversion.
5. Analytics and reporting:
   • Collecting transaction data.
   • Generating reports for sales analysis.

Example of a payment gateway​

Scenario: Online shopping​

1. The client selects the product and proceeds to checkout.
2. The customer enters card details on the payment page.
3. The payment gateway encrypts the data and sends it to the acquiring bank.
4. The acquiring bank requests authorization from the issuing bank.
5. After successful authorization, the client receives payment confirmation.
6. Transaction data is passed to the merchant to update the order status.
7. After a few days, the money is transferred to the merchant's account.

Benefits of using a payment gateway​

1. Safety:
   • Protecting card data from fraudsters.
   • PCI DSS compliance.
2. Flexibility:
   • Support various payment methods.
   • Possibility of integration with CRM systems and other services.
3. Customer convenience:
   • Easy to pay.
   • Multicurrency support.
4. Process automation:
   • Automatic order status update.
   • Generating reports and analytics.

Conclusion​

A payment gateway is a key element of an electronic payment system that ensures secure and efficient transaction processing. It allows merchants to accept payments from customers via various payment methods, as well as interact with banks and payment systems. Understanding how a payment gateway works is important for business owners, developers, and financial administrators.

If you have any additional questions about how payment gateways work or examples of their use, ask them!

 

[Man]

A payment gateway is a technology service that ensures secure data transfer between a store (merchant), an acquiring bank, and a payment system (Visa, Mastercard, etc.). It encrypts card data, verifies transactions, and helps transfer money to the merchant's account.

1. Basic functions of the payment gateway​

1. Acceptance of payments (cards, electronic wallets, cryptocurrencies).
2. Data encryption (PCI DSS standard).
3. Transaction verification (3D Secure, anti-fraud filters).
4. Redirecting requests to banks and payment systems.
5. Refunds and chargebacks .

2. How does the payment process work?​

2.1. Standard online payment​

1. The buyer enters card details on the website.
2. The gateway encrypts data (tokenization, SSL).
3. The request is sent to the issuing bank (which issued the card).
4. 3D Secure (if connected) – code request from SMS/application.
5. The bank confirms or rejects the payment.
6. The money is reserved and transferred to the merchant’s account within 1–3 days.

2.2. Non-cash payments (SBP, PayPal)​

• For the FPS (Fast Payment System), the gateway generates a QR code or link.
• For electronic wallets (WebMoney, ЮMoney) – redirects to their system.

3. Technical implementation​

3.1. Integration methods​

Method	Description
API	Direct connection to the gateway (programmers needed).
Hosted Payment Page	The buyer is taken to the gateway page (simpler, but less customizable).
SDK/widgets	Ready-made payment forms for a website or mobile application.

3.2. API Request Example (REST)​

POST /payment/ HTTP/1.1  
Host: api.paygateway.com  
Content-Type: application/json  

{  
"amount": 1000,  
"currency": "RUB",  
"card_number": "4111111111111111",  
"expiry": "12/25",  
"cvv": "123",  
"description": "Order #12345"  
}

Answer:

{  
"status": "success",  
"transaction_id": "txn_123456789",  
"message": "Payment processed"  
}

4. Security (PCI DSS)​

Payment gateways must comply with the PCI DSS standard , which includes:
✔ Data encryption (TLS 1.2+).
✔ Tokenization (replacing card data with a unique token).
✔ Regular audits .

Vulnerabilities to avoid:

• Storing CVV/CVC code.
• No 3D Secure for high amounts.

5. Popular payment gateways​

Name	Peculiarities
Stripe	Global payments, cryptocurrency support.
PayPal	Popular for international payments.
CloudPayments	Local (CIS), support for SBP.

6. Commissions​

• Regular transactions: 1.5–3% + fixed amount (e.g. 10–30 RUB).
• High-risk (games, VPN): up to 5–10%.
• Chargeback payments: additional penalty (up to RUB 3,000).

Conclusion​

1. A payment gateway is a "bridge" between a store, a bank and a client.
2. Security is ensured through PCI DSS, tokenization and 3D Secure.
3. Integration is possible via API, Hosted Page or SDK.

Need help choosing a gateway or setting up an API? Ask!