A payment gateway is a software that enables the secure transfer of transaction data between a merchant's website and an acquiring bank. It serves as an interface for processing online payments. Key characteristics of reliable payment gateways include strong data encryption, authorization request sending to verify funds and card validity, and order confirmation or cancellation processing. Payment gateways must comply with PCI DSS security standards to safely transmit sensitive cardholder information between merchants and banks for online purchase processing.

1. HOW ONLINE PAYMENT
GATEWAY WORKS

2. Page 1
1.61 people made online purchases
in 2016 alone.

3. Page 2
Global e-retail sales amounted to 1.9
trillion USD that same year

4. Page 3
To accept and process all these payments,
payment gateways were created
Merchant Account Bank
Payment Gateway
Merchant Website
Visa / Mastercard Network
Card Holder Issuing Bank
Card Holder

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WHAT IS AN ONLINE PAYMENT
GATEWAY?

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What is an online payment gateway?
It’s a software that enables the transfer of transaction data from the merchant to the
acquiring bank and serves as an interface between the payment form on the
merchant’s website and an acquiring bank.

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WHAT CHARACTERISTICS ARE CRUCIAL
FOR PAYMENT GATEWAYS?

8. Characteristics of a payment gateway
Page 7
1. Data encryption.
Reliable payment gateways protect the information as it is
transferred inside the system.

9. Characteristics of a payment gateway
Page 8
2. Authorization request sending.
A payment gateway:
• checks whether a merchant has enough funds on his account;
• whether the issuing bank has no limitations for this specific card;
• returns the answer to the merchant.

10. Characteristics of a payment gateway
Page 9
3. Filling the order.
This confirmation or cancellation of the order takes place inside the
payment gateway system after the cardholder enters and submits his
credit card details.

11. Characteristics of a payment gateway
Other important characteristics:
• Address verification system;
• Risk scoring system;
• Fraud management;
• Geolocation estimation.
Page 10

12. Reliable and safe payment gateways
must comply with PCI DSS standards.
* PCI DSS standards are issued by the PCI Security Standards Council, a global organization that maintains,
evolves and promotes Payment Card Industry standards for the safety of cardholder data across the globe.
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13. How a payment gateway works
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MERCHANT ISSUERCARDHOLDER

14. How a payment gateway works
Page 13
A user fills out a form He enters his credit card details Clicks “Submit”
Step 1

15. How a payment gateway works
Page 14
Merchant receives
customer’s information
Data goes into the
payment gateway
Client receives
unique ID.
Step 2

16. How a payment gateway works
Page 15
Authorization request sent to the
acquiring bank and to the IPS
Issuing bank performs fraud monitoring
and ensures credit card validity.
Step 3

17. How a payment gateway works
Page 16
3D-Secure verification Confirmation sent to the IPS.
Step 4

18. How a payment gateway works
Page 17
Information redirected from the IPS to the acquiring bank.
Step 5

19. How a payment gateway works
Page 18
A payment gateway sends a request to the
acquiring bank to subtract order amount
After confirmation, it redirects data
to the IPS and the issuing bank.
Step 6

20. How a payment gateway works
Page 19
Issuing bank checks the
user’s balance on the card
The issuing bank
conducts transfer
Then it sends confirmation
of the transaction to IPS
Step 7

21. How a payment gateway works
Page 20
IPS confirms the transaction
to the acquiring bank
The acquiring bank returns the
confirmation to the payment gateway.
Step 8

22. How a payment gateway works
Page 21
The merchant is informed about a successful transaction
within 15 minutes.
Step 9

23. How a payment gateway works
Page 22
An immediate crediting of cardholder’s account in
merchant’s system takes place.
Step 10

24. The end.
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