Payment gateway.

In plain English

A payment gateway is the software layer that takes a customer's card or account details at checkout, encrypts them, and routes the authorization request to the acquiring bank and the card network. It handles the front end of a transaction: capture, encryption or tokenization, fraud screening rules, and the approve or decline message that comes back within seconds. The gateway does not hold your money. Settlement, the actual movement of funds into the merchant's account, is handled by the acquirer and the networks over the following days.

01Why it matters

When a payment fails at checkout, the gateway is usually where the message came from, and the rules it enforces on things like address matching decide whether a perfectly good card gets declined.

02The math, step by step

Say a gateway charges 10 cents per transaction on top of processing fees. A shop running 8,000 transactions a month pays 800 dollars a month, or 9,600 dollars a year, for the gateway alone before network and acquirer fees are counted.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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