What is a Payment Gateway? How it Works, Functioning, Types, Benefits, and much more with Example

A payment gateway is a technology that securely processes online payments for businesses. It acts as a bridge between a customer's bank and the merchant's account, ensuring that payment details are encrypted and transmitted safely. When a customer makes a purchase, the gateway verifies the payment information, checks for fraud, and then approves or declines the transaction. Types of payment gateways include hosted, integrated, and self-hosted. Benefits include increased security, seamless transactions, and access to global markets. For example, when buying a book online, the payment gateway processes your credit card info and confirms the payment, allowing you to complete the purchase smoothly.