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Payment Gateway for E-Commerce Businesses (2022)

With an increase in the rise of e-commerce – safe and secure transactions are the needs of the hour. Most essential services and products are now at everyone’s disposal. Countries like India, have seen a huge boost in the reach of broadband connectivity. In times like these, consumers have also become susceptible to cybercrimes.

A Payment Gateway is an effective solution to tackle these situations. It is a merchant service that acts as a middle-man between a merchant and the payment service providers, authorizing the transaction.

The gateway will authenticate the captured credit card information entered by the customer and send it to the acquiring bank and the issuing credit card company.

Payment Gateways are beneficial for both the merchant and the customers. They protect the customer’s payment data by encrypting sensitive data to keep away from fraudulent activities. Secured Payment Gateway safeguards the merchant from expired cards, closed accounts, insufficient funds, and exceeding the credit limit. They optimize the smooth running of any online business.

Many small businesses have been able to take off because of the security and safety that these Payment Gateways provide. Getting paid for your work ensures the quality and accuracy of your work.

It also sets the bar high for the future expansion of your business. Bloggers and freelancers have received the due respect that their work always deserved. Selling tickets, your favorite e-books, or reaching out to the desired audience through tutorials have never been easier.

Popular platforms like WordPress have also started proving a variety of plugins to their users. I prepared a list of Top 10 Payment Gateways in India. Some of these payment gateways are completely free of cost at the time of set-up. For more features and better security, the users can upgrade to a paid version.

Why Payment Gateways?

As an entrepreneur who is just about to start with his/her online venture, you might want to ask why should you trust payment gateways.

To clear that particular confusion, note the following points:

  • Payment Gateways help to increase the traffic of a blog or a web page: Even if your work starts getting accepted by a small crowd, if the payment options on your site are seamless, you can expect to see a quick rise in the number of visitors to your site.
  • They increase the payment flow. Most payment gateways are wired to accept payment from all the major banks and in all the major currencies. Apart from credit and debit cards, gateways are also accepting non-card wallets like payments made through UPI/ PayTM/ PayPal accounts.
  • Once the worries of payments are shouldered-off, as a businessperson, you can solely focus on your business and the ways to improve it.
  • Payment Gateways provide security. Today everyone online is susceptible to cybercrimes. In this case, along with personal data, other sensitive data is also present. These gateways use encryption techniques, like hashing, to ward-off fraudulent activities. They use tokenization to prevent the leakage of sensitive data to the cyber world.
  • Most importantly, these gateways are cost-effective. They offer convenient turnkey payments with low, transparent costs.

Are Payment Gateways and Payment Processors the same?

Payment Gateway:  A Payment Gateway is an important instrument for the transmission of data between the merchant and the consumer. It is also responsible to safeguard the personal data of the customer by encrypting the sensitive data and also prevent fraudulent activities on both sides.

Payment Processor: A payment processor is an important participant in the transaction process. After the gateway has transferred the transaction data to the processor, it links all the four components of the transaction; the merchant, the consumer, the issuing credit card company or bank, and the acquiring bank of the merchant for collection of funds.

So, payment gateways and payment processors are not the same. 

How does payment gateway work?

Before investing in a payment processor, it is equally important to understand its working. Let’s check it now.

  • The website should have a button for placing an order or purchasing a particular service. So, the first step is for the customer to place that order or purchase a service and then enter the personal details for the online transaction.
  • Secure Socket Layer (SSL) Encryption is used to encrypt by the customer’s web browser and sent it to the merchant’s webserver.
  • The payment gateway forwards the transaction information to the payment processor that is used by the merchant’s acquiring bank.
  • The payment processor then sends the transaction data to the card company (e.g.: Visa, MasterCard).
  • The credit card company receives the authorization request. It then sends the response code to the payment processor. The payment processor further sends it to the payment gateway which then sends the information to the website. The website checks for the relevance of the response code. It sends the response code to the merchant and the cardholder.
  • The merchant submits all the approved authorizations in a ‘batch’ to the acquiring bank via the payment processor. The acquiring bank then processes all the transactions and deposits the funds within 2-3 business days.

Setting up a Payment Gateway: Here is what all you need

Payment Gateways are the safest options for getting paid for your time and services, online. Therefore, to add the plug-in to your WordPress website or any other business website, the following steps will be useful.

1. A merchant account – A merchant account is an account that is set up with the payment provider. After the response code of the credit card or debit card issuing company is authorized by the merchant’s webserver, the required funds get transferred from the payee’s account to the merchant account, where it is temporarily held. Funds that get stored in this account are periodically transferred to the registered bank account of the merchant or his organization.

(In case, you want the funds to be deposited directly into your account, then it is better to upgrade your payment gateway and get services like being able to link your PayTM wallet or PayPal wallet)

2. A web page with a specific button, indicating that the transaction is in the process: A button-like, ‘Buy’ or ‘Place order’, kick starts the transaction process. The code provided by your service provider or a specialized shopping cart software can be used for initiation.

As a merchant, once you have set up your web page or website, you can head on to the section to integrate the payment gateway with your website.

You need to install a plugin on WordPress and any other CMS that you are on, or you can do integration in PHP.

Read through the service agreement and understand the transaction fee and the annual maintenance charges before signing on with a particular payment gateway company.


Payment Gateway is the foundation of any online business. With more and more customers turning to online shopping and increasing online selling trends, it is easier than before to reach out to a target audience for selling a product.

However, many entrepreneurs make the mistake of not doing enough research before investing in a payment gateway or setting up their business. This can lead to serious cybercrimes like identity theft, man-in-the-middle attack, or denial of service attacks (DDoS).

Make sure to understand and look for all the necessary security certifications in your payment gateway. Give your customers the best user experience and let the joy of giving respect to your work, light up your heart!

Aditya Goyal
Aditya Goyal

Author, Researcher, and SEO Expert with over 6 years of experience in Writing Content on Money Making Ideas, Startup Resources, and Business Growth. With a background in Marketing and Operations, I love to help individuals/businesses to create their own success stories.

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  1. […] Online Selling is loaded with benefits for both the seller and the customer. However, the security and safety of people can also get compromised easily, online. A Payment Gateway is an effective solution to tackle these situations as being a merchant. Payment Gateway is the premise of E-Commerce. […]

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