Payment lingo: Credit card processing gateways

Payments can be complicated ─ especially if your business is just starting out. You don’t need to become a payments expert to start accepting credit cards. But understanding a few basic payment terms will help you make the best decisions for your business.

Today’s topic: Credit card processing gateways.

A credit card processing gateway is a connection point within the payment journey. A gateway connects your shopping cart, point-of-sale (POS) system or virtual terminal to the next point in the payment authorisation process. Gateways connect businesses to payment processors, major credit and debit card networks and your customers’ issuing banks. It's often an invisible connection point doing work behind the scenes.

Credit card processing gateways can be used for processing payments online, in-store or both, and are used by merchants of every size in every industry. Gateways provide easy integration and setup options that offer access to major payment processing platforms.

Let’s look at the advantages and features of gateways.

What are advantages of credit card gateways?

Credit card processing gateways offer many benefits to business, including flexibility, simplicity and security. Payment gateways are a convenient option for any business seeking a turnkey payment solution with low and transparent costs.

Growing businesses require flexible solutions to accommodate growth and change, like when a business outgrows their e-commerce platform provider. Gateways offer flexibility to connect to the payment processor of your choice, or even to multiple processors simultaneously.

Protecting your business is job number one. That means payment security needs to be a key consideration when selecting any and all payment services. Credit card processing gateways typically include built-in security features, like encryption and tokenisation that help protect your business by keeping sensitive credit card data safe from fraud.

Is a separate gateway needed in addition to a credit card processor?

The real question is whether your existing payment solution has a gateway built-in, or if you need to add a stand-alone gateway. Payment providers often bundle gateway services with their integrated solutions, so your business may be using a gateway and not even know it.

Large enterprise merchants will often develop direct connections to payment processors, essentially building out all the functions of payment gateways themselves.

Are there any disadvantages to gateways?

A gateway places an additional point of contact between you and your payment processor. Third-party gateway services charge fees that might include a setup fee, ongoing monthly fees and per-transaction fees.

Another potential disadvantage is that not every gateway is compatible with every payment processor. If you’re already working with a payment processor you like, make sure any gateway provider you consider is compatible with that processor.

Are gateways helpful with payment security?

Payment security is a critical consideration when selecting any payment solution, including credit card processing gateways. Using a payment gateway can relieve some PCI requirements by reducing or eliminating the burdens of PCI DSS (Payment Card Institute Data Security Standards).

Credit card processing gateways often include encryption and tokenisation as part of their service. Encryption helps protects cardholder data from the moment it is entered and throughout the entire transaction. Tokenisation helps make payments more secure, while making possible secure post-authorisation services such as recurring payments, adding tips to transactions and card-not-present (CNP) voids and returns.

Payment security is a vital link that protects your business from direct financial and reputational loss. Take the time to understand what security services are and are not offered by any potential gateway provider. Experts from leading credit card processors can often be a great resource when setting up payment security for your business.

Connect to the future of commerce

To learn more about what you need to accept credit cards, connect with one of Worldpay's payments experts. We’ll work with you to customize a solution that fits the way your business works.