A payment gateway is the component that captures card details at checkout and passes them securely to the processor. It is the software layer between your checkout page and the payment rails. It does not move money itself — that is the processor's job.
What the gateway actually does
- Captures the card details
Usually inside an iframe or hosted field, so the raw card number never touches your server.
- Encrypts and tokenises them
The card data is replaced with a token — a reference you can safely store and charge later.
- Sends the authorisation request
The gateway passes the transaction to the processor, which routes it through the card network to the issuing bank.
- Returns the result
Approved, declined, or requires additional authentication such as 3D Secure.
Gateway versus processor versus acquirer
| Role | Responsibility |
|---|---|
| Gateway | Captures and encrypts card details at checkout |
| Processor | Routes the transaction through the card networks |
| Acquirer | The bank that receives and holds the funds |
| Issuer | The customer's bank, which approves or declines |
Traditionally you assembled these separately: a gateway from one vendor, a merchant account from an acquiring bank, and a processor connecting them. Modern providers bundle all four behind one signup, which is why you can start taking payments the same day.
When you would still buy one separately
Standalone gateways still exist, and there are two reasons to use one. You already hold a merchant account through an acquiring bank and only need the software layer. Or you want to route transactions across several processors — see payment orchestration — in which case the gateway sits above all of them.
For most businesses neither applies, and a bundled provider is simpler and cheaper. Compare what each charges in the processor fee comparison.
GOOD QUESTIONS
Frequently asked
What is the difference between a payment gateway and a payment processor?+
The gateway captures and encrypts card details at checkout and passes them on. The processor routes the transaction through the card networks to the customer's bank and back. Most modern providers bundle both into one product, which is why the terms are used interchangeably.
Do I need a separate payment gateway?+
Usually not. Stripe, Square, Adyen, Paydude and similar providers include the gateway. You would only source one separately in a traditional setup where you already hold your own merchant account through an acquiring bank.
Does a gateway store card details?+
A good one does not store raw card numbers on your servers at all. It tokenises them, returning a reference you can charge later while the actual card data stays inside the provider's PCI-compliant environment. That is what keeps you out of the strictest PCI scope.
What does a gateway cost?+
In a bundled provider it is included in the per-transaction rate. Standalone gateways typically charge a monthly fee plus a small per-transaction amount — Authorize.net's all-in-one plan, for example, is $25 a month plus 2.9% + 30¢.