Payment gateway

How it works

At checkout the gateway collects the card in a field or iframe it controls, encrypts it, and swaps the number for a token before anything reaches your server. It then translates the request into whatever format your processor expects and sends it for authorization. The approval comes back the same way, along with the AVS, CVV and 3D Secure results. Your capture request rides those rails too. The money itself does not move until settlement.

The fee that hides here is the per-authorization charge. Some gateways bill a few cents on every attempt, declines and $0 card verifications included, so a business with a high decline rate is paying for traffic it never converts. Compare the authorization or transaction count on your statement with your own count of approved sales. A wide gap means you are buying failures, and cleaning up the retries cuts the bill.

Your choice of gateway also sets your PCI scope. A hosted page or an iframe field keeps card data off your servers and puts you in the lightest self-assessment questionnaire, SAQ A. A gateway that posts card data through your own page pulls you into a heavier one, with quarterly scanning and more evidence to produce. The same decision shapes your checkout conversion and whether your stored cards can move with you when you leave. Settle it before you build.

Worked example

A shop doing 1,200 card sales a month on $60,000 of volume pays a standalone gateway $25 a month plus $0.10 per transaction. Call it $145, or about 0.24% of volume, sitting on top of whatever the processing itself costs. Now add 200 declined attempts that get billed at $0.10 as well. The total is $165 and the gateway is quietly costing roughly 0.28%.

Frequently asked questions

Is a payment gateway the same as a payment processor?

They are different layers, though most merchants buy them as one product. The gateway is the software that captures card data at checkout and passes it on. The processor is the company that moves the money between the issuing and acquiring banks. Buy them separately and you sign two agreements and pay two sets of fees, which is why the number to compare is the combined cost, not the processing rate.

Do I need a payment gateway if I sell on Shopify or WooCommerce?

You already have one, you just did not buy it separately. Shopify includes a gateway with Shopify Payments, and WooCommerce runs whichever gateway plugin your provider supplies, so the real question is which processor sits behind the checkout. Watch the Shopify part: it adds an extra transaction fee when you use a processor other than Shopify Payments, and that fee can outweigh a lower headline rate.

How much does a payment gateway cost?

Roughly $10 to $30 a month plus a few cents per transaction, if you buy the gateway on its own. Bundled into a processing rate it costs nothing separately, because it is already in the rate. Some older contracts also carry a setup fee. To see what yours really costs, add the monthly and per-transaction parts together and divide by your monthly volume.