Ecommerce Payment Gateway - Your Gateway to Safe Transactions


Gone are the days when customers used cash and credit cards to purchase products. As more customers buy products online, they want more payment choices. Today, 70% of customers say that the availability of their preferred payment method plays a significant role in choosing an ecommerce brand for shopping. They wouldn’t hesitate to abandon the brand if it doesn’t provide an option to pay with their preferred payment method.

That’s why an ecommerce payment gateway is so important. An ecommerce payment gateway supports different payment methods and allows your customer to pay with their preferred choice. 

In this blog, we’ll discuss:

  • What is an ecommerce payment gateway?
  • Types of ecommerce payment gateway
  • Difference between payment gateways and payment processors
  • Key functions of a payment gateway
  • Key players in a payment gateway system
  • How does a payment gateway work?
  • How to choose an ecommerce payment gateway?
  • How will Marmeto help you set up a payment gateway?

This will help you understand how an ecommerce payment gateway functions and how to choose the right option to start accepting different types of payments and growing your business. 

What is an ecommerce payment gateway?

An ecommerce payment gateway is a platform that acts as an intermediary between the customer, merchant (ecommerce company), and their respective banks. It allows you to accept various types of customer payments, such as credit cards, debit cards, mobile wallets, contactless payments, and more. The role of a payment gateway is to transmit the customer’s payment information to the payment processor and relay the information between the banks and merchants to ensure a smooth payment experience for customers.

An ecommerce payment gateway can help you:

  • Transact money safely without worrying about fraud or data breaches.
  • Increase customer trust and conversions by ensuring smooth and safe transactions.
  • Expand business by accepting multi-currency payments from customers worldwide.
  • Manage the transactions and make data-driven decisions on payment experience with the help of real-time data and dashboards.


Types of ecommerce payment gateway

There are primarily four types of payment gateways available to ecommerce companies:

  • Hosted payment gateway

A third-party payment provider hosts the payment system in hosted payment gateways. So, when customers buy a product, they are led to the host’s website to complete the transaction. The hosted payment gateway is integrated with your website or app. The benefit of a hosted payment gateway is you don’t have to worry about maintenance or security. The third-party payment provider takes care of everything.

  • Self-hosted payment gateway

The self-hosted payment gateway manages the payment transactions directly on the ecommerce company’s server. It gives you complete control over the checkout and payment process, and you can tailor it according to your preferences. Self-hosted payment gateways are also safer than other payment gateways. However, setting up and maintaining the infrastructure can be expensive. Additionally, you would need skilled resources to install and maintain the payment gateway. Consider using a self-hosted payment gateway if you have the money and resources. 

  • API-hosted payment gateway

An API-hosted payment gateway processes payments through APIs. It processes transactions by transmitting the payment data to the payment processor, getting authorization, and returning the result to the ecommerce site. With API integration, you can customize your checkout process, support various payment methods, and scale without disruption. However, you need a team with deep programming and data security knowledge to integrate the APIs with payment gateways.

  • Local bank integration gateway

A local bank integration gateway is helpful for region-specific transactions. It integrates the ecommerce website with local banks to facilitate online transactions. The localization increases customer trust, as customers can use payment methods they know. However, you can only accept payments that the local banks support. 


Difference between payment gateways and payment processors

People often use both terms interchangeably as both are used in ecommerce transactions. However, they serve different purposes. 

Payment gateways are client-facing. They collect customer payment information, encrypt it, and safely relay it to the payment processor.

Payment processors validate the customer information and seek approval from the banks.

Once the banks approve or decline, the processor relays the information to the payment gateway and communicates the transaction status to the ecommerce website.

The ecommerce payment gateway and payment processor work together to ensure seamless transactions between customers and the ecommerce company. 

Key functions of a payment gateway

The payment gateway you choose must perform the following functions efficiently:

  • Encryption

Encryption transforms the customer’s sensitive data into unreadable code and safeguards it from unauthorized access across devices, merchant servers, and financial institutions.

  • Payment processor

The gateway should connect seamlessly with the payment processor to ensure authorized transactions between the customer and the merchant’s banks.

  • Authorization

As soon as the customer pays, the payment gateway must send the authorization details to the payment processor and notify the merchant about payment approval or rejection. The customer’s orders will be processed only after the ecommerce company receives approval.

  • Fraud detection

The payment gateway must detect transaction fraud and take preventive measures to safeguard customer’s money. 

  • Data collection and reporting

The payment gateway must provide transaction history, refund details, and other data points to help the company manage transactions and analyze market trends that could shape the customer’s payment experience. 

Key players in a payment gateway system

A payment gateway doesn’t function independently or in silos. Various players in the ecosystem work together to ensure smooth and safe transactions between the customer and the merchant’s bank.

  • Merchants

Merchants or sellers are businesses or individuals who sell products or services. To accept customer payments, they need a merchant account and integrate it with the payment gateway. 

  • Customer

The customer or buyer is the one who purchases a product or service and uses payment methods such as debit or credit cards, net banking, and digital wallets to make payments. 

  • Banks

There are two banks involved—the acquirer and issuer banks. The acquirer banks have the merchant’s account and receive payment on the merchant’s behalf. The issuer bank has the customer account from which the payments originate. 

  • Payment gateway

The payment gateway acts like a bridge between the ecommerce website, the issuer’s bank, and the acquirer’s bank. It connects with all players to ensure a smooth and secure transaction.

  • Payment Processor

The payment processor is responsible for authorizing and transacting payments securely between the issuer and acquirer banks. 

How does a payment gateway work?

Here’s a step-by-step process of how an ecommerce payment gateway works.

  1. The process begins with customers entering their payment information on the ecommerce website's checkout page. At this stage, the payment gateway encrypts the customer’s sensitive data using SSL or TLS protocols and sends it to the business server. 

  2. The business server stores the data and forwards it to the payment gateway again for processing. The payment gateway sends it to the payment processor for authorization. 

  3. The payment processor receives the data and sends it to the acquirer bank, which then transfers it to the issuer bank for authorization.

  4. Once the issuer bank authorizes the customer’s details, such as their account balance and payment method validity, it rejects or approves the payment. This information is sent to the payment processor. Based on the result, the payment processor declines or accepts the payment. It then sends the information to the acquiring bank, payment gateway, and the business server. 

  5. The payment gateway sends the transaction status to the ecommerce website to update the customer. Once the payment is accepted, the ecommerce company can fulfill the orders.

How to choose an ecommerce payment gateway?

You would need a trustworthy payment gateway to ensure smooth and secure transactions. You must check the following parameters when choosing an ecommerce payment gateway.

  • Customers’ payment preferences

Before choosing the ecommerce payment gateway, check your customers' preferred payment methods. The safest solution is to select a gateway that supports multiple payment methods, such as major credit cards, mobile wallet payments, and contactless payments. If you plan to accept international payments, ensure that the payment gateway supports multi-currency payments.

  • Integration with existing systems

While choosing an ecommerce payment gateway, check if its APIs integrate well with existing and third-party systems. This is important to ensure that the processes - from customer ordering and paying for the products to processing the payments and fulfilling the orders operate smoothly. 

  • Transaction fees

Payment gateways charge a percentage of your transactions in addition to the monthly charges. There could also be hidden charges that emerge during billing. Hence, understand the costs thoroughly before investing in the payment gateway. 

  • Security and encryption features

Check if the payment gateway complies with the Payment Card Industry (PCI). A PCI-compliant gateway ensures that credit card information is accepted, processed, stored, and maintained securely. Ensure that the payment gateway also offers features that can easily detect and prevent fraud. 

  • Scalability and support

As your business grows, the payment gateway should be able to process large transaction volumes smoothly. Hence, choose a payment gateway that can scale as you grow. Also, ensure that they are responsive and provide timely support whenever needed. This is important to ensure that the transactions take place smoothly. 

  • Providers’ reputation

A payment gateway is responsible for your reputation. If it doesn’t smoothly relay information between processor, customers, and merchant, you’ll likely lose customers due to payment issues. Hence, choose a payment gateway provider with a good reputation who will ensure smooth and secure transactions and improve customer experience. 

  • Flexibility 

Typically, customers use around eight ways to make payments. They could either choose to pay using a default payment method or switch between the payment methods to make quick payments. Either way, the payment gateway should be flexible enough to support this switch in payment methods. 

If you’re looking for a specific ecommerce payment gateway to get started but don’t know which one to choose, consider using Shopify Payment. You can use Shopify Payment to accept popular payments, prevent churn, and boost sales and revenue. Shopify Payment is PCI-compliant and gives you complete control over the cash flow with its integrated back office.

How will Marmeto help you set up a payment gateway?

Setting up a payment gateway using ecommerce platforms like Shopify is easy. The merchants can follow a few simple steps to get started.

The real challenge emerges when platforms like Shopify don’t support a specific payment gateway or when the merchant offers custom payment options like EMI or exclusive offers with payment processors.

That’s where Marmeto can help the merchants.

At Marmeto, we help ecommerce companies integrate custom payment gateways and methods with their websites to seamlessly accept payments. 

Take Ample (Imagine store’s website), for instance. Imagine store is Apple’s authorized premium partner. They wanted to migrate their store from the existing Spree platform to a scalable platform that could prepare them for current and future growth. They chose Shopify for migration. However, the store soon hit its first roadblock. Apple works exclusively with Pine Labs, and Pine Labs did not have a ready integration with Shopify. We used our expertise to overcome the integration issues with Pine Labs, which enabled the store to provide customers with custom payment options like EMIs and exclusive deals with specific banks.

Similarly, we integrated PayPal with QuirkSmith’s Shopify website, which enabled them to expand their business and accept cross-border payments from other countries. 


As you scale your business, your ecommerce website should always be able to accept large payment volumes. A reliable payment gateway will ensure that your customers' payments go through smoothly and safely, irrespective of the traffic.

Choose an ecommerce gateway that is scalable, secure, and integrates seamlessly with existing and third-party platforms. Ensure it is PCI-compliant, easy to implement, and does not carry any hidden charges that could ruin your budget.

More importantly, work with a trusted technology partner who can understand your business needs and choose a payment gateway that meets all your requirements.

Contact us to implement a payment gateway for your business.



  • What is a payment gateway in ecommerce?

An ecommerce payment gateway is a technology that acts as an intermediary between the ecommerce website and the payment processor to accept online payments from customers.

  • Can you use multiple payment gateways in ecommerce?

Yes, you can integrate multiple payment gateways with your ecommerce website to support different payment methods and provide customers the flexibility to use the payment method of their choice. 

  • How to choose the right payment gateway?

Choose a payment gateway based on customers’ payment preferences, its ability to integrate with existing systems, its security and encryption features, its reputation in the market, and its capability to scale during peak times. 

Get In touch