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What Is Payment Gateway And How To Integrate It Into Your Store

Maryna Cherednychenko - March 4, 2020 - 0 comments

Today, almost any app, regardless of what product it sells, offers online payment options. With the increasing pace of life, people prefer to buy, book, and rent right of the bat. So, if you are going to launch your project or have one, you should think of a tool that will handle your electronic payments. A mobile payment gateway will help you in this matter. It’s a hi-tech and secure means to process cashless transfers, which brings perks to both the seller and buyer.

What Is a Payment Gateway?

A payment gateway is a technology that allows traders to accept money from debit and credit cards. This statement is true for physical stores and online services. However, if we speak of mobile apps, we mean software that integrates online payment processing for e-commerce operations.

Payment gateway takes part in the online sale from the moment of adding products to the cart until payment and transaction confirmation. It encrypts private information stored on the charge card so that it securely goes to the app frontend and then – to the servicing bank. Also, it sends transaction details back to the app once the payment processor approves or denies the deal. In such a  manner, the payment gateway acts as a bridge between the seller and the buyer.

How Online Payment Gateway Works

Payment gateway brings together the seller platform, acquiring bank, payment system, and the buyer. Below is a general look at the steps that take place when processing a payment.

  1. A user adds items to the shopping cart, clicks “Pay,” and enters card details
  2. Card details and order amount go to the payment gateway
  3. Payment gateway sends an authorization request to the acquiring bank and payment system, for example, Visa or MasterCard
  4. If you work with 3D Secure 2.0, the user may be asked to confirm payment by entering a password or biometric. After that, the issuing bank approves charge-off
  5. The payment gateway transfers the amount to be debited to the acquirer bank
  6. The issuing bank checks whether there are enough funds on the client’s card and sends the needed amount
  7. Visa or MasterCard sends a confirmation to the acquiring bank and payment gateway
  8. The money goes from the cardholder account to the merchant account
Online payment processing

How payment gateway works

How To Integrate Online Payment Gateway

There are four ways to connect a payment gateway to your app or website. Let’s examine each of them so that you decide what suits your e-commerce store best of all.

Full Redirect

This method is the easiest, fastest, and cheapest. But you always have to pay the piper. With a full redirect, users should go to the external page to complete a deal. It means that the purchase takes place not on your page, but on the provider’s page, where the service redirects the user when they click the “Pay” button.

Full redirect requires minimum time and effort. All you need to do is place a button on your website or mobile app. Clicking the button activates the gateway API to process the transaction. Take a look at the PayPal guide as an example.

The main drawback of this third party payment is poor user experience and, as a result, more unhappy clients. However, the good thing is that the gateway provider is totally in charge of payment processing. It stores card data, so the merchant does not need to comply with PCI-DSS.


  • Easy setup
  • No red tape
  • No responsibility for sensitive data


  • Bad user experience
  • Lack of data control
  • Risk of the man-in-the-middle attack

When to use

Beginner sellers, home-owned firms, small businesses

Third party payment

Full redirect method

Hidden Redirect

If you choose this method, your buyers will not have to go to the external source to complete a purchase. Visually, everything happens on your page.

A hidden redirect is also called a direct post. It means that your app handles entering card details, but it is the payment service provider who processes the transaction. The user starts and ends the payment on your page, so the UX is not in danger. At the same time, your server does not keep user data, so you don’t have to apply for PCI-DSS compliance. 

It seems to be a perfect solution; however, there is a slight problem. Direct post transactions are not secure. You risk leaking sensitive data. And this is what you would like the least.


  • Better branding
  • Relatively easy setup
  • No red tape


  • Lack of data control
  • High risk of data theft

When to use

Small enterprises that want to enhance their branding

Ecommerce credit card processor

Direct post method

In-Store Payment

In-store payment conducts a transaction solely at the seller’s place. This method works based on server integration. It means that your app or website stores all the user data. However, the payment service provider processes the transactions. In-store payment offers the best UX and contributes to a reliable brand name. Users fill out payment forms and go through all stages of the operation on your page. The transaction takes place as soon as possible, so the user has a sense of cooperation with a trustworthy company.

The pitfall of such integration is mandatory compliance with PCI-DSS. Also, you will be totally in charge of cardholders’ data, so make sure to provide secure payment systems.

If you pitch upon the server-based method, make sure to check our next post about top secure payment systems that you can choose for your store.


  • Strong branding position
  • Control over user data
  • Secure credit card processing


  • A lot of paperwork to set up PCI-DSS compliance
  • Site preparations for security matters

When to use

Middle and big businesses that care about their reputation

How payment gateway services work

Server integration method

Custom Gateway

Developing a custom gateway is like ordering a costume in a tailor shop. Yes, you can buy a finished item in a store, but it will not be unique, and almost certainly, it will not meet all your expectations. Custom gateway is a costly affair. Get ready to pay a princely sum for engineering, maintenance, legal approval, documenting, and administrating. Nevertheless, if you own a big business, the game may be worth the candle.

If you want to take it this way, here is what you should do.

  1. Enter for payment provider list. For that, define credit card institutions you want to work with and contact your acquiring bank.
  2. Contract payment processors. Choose banks that will handle the transactions. Before signing the agreement, check the transaction fees. They may vary from bank to bank.
  3. Produce API. Hire experienced developers that will create a glitchless API under PCI-DSS requirements.
  4. Set up admin tools. Build a convenient admin panel so that your staff can easily manage merchant transactions.

If you want to reduce the costs of development, you may utilize the open-source software, such as OmniPay or ActiveMerchant. However, it will limit your personalized features.


  • Сheap maintenance of transactions
  • Fully customized functionality
  • Extra source of revenue (you may sell your gateway to other merchants)


  • Heavy expenses
  • Long-lasting development
  • Preparations for legal compliance

When to use

Enterprise-scale merchants with more than 1-2 million deals a year

ecommerce credit card processor methods

Four ways to integrate online payment gateway into your app

Choose Your Way

Either you are a small merchant or a sizable enterprise, you should set up an online payment gateway to be able to trade online. The four set up methods are different. None of them is good or bad, yet, each of them covers a specific business niche. To cut a long story short, we advise

  • opting for full and hidden redirect methods if you just start your business
  • selecting server integration if you are a small or medium business owner
  • pay attention to custom development if you run a mature and stable company.

At Softensy, we have dealt with each way of integration so, if you look for a reliable team to handle payment gateway setup, land here. We know what to do!

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