Payment Gateway is a merchant service provided by an e-commerce application service provider that authorizes credit card or direct payments processing for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. It may be provided by a bank to its customers, but can be provided by a specialised financial service provider as a separate service, such as a payment service provider.
A payment gateway facilitates a payment transaction by the transfer of information between a payment portal (such as a website, mobile phone or interactive voice response service) and the front end processor or acquiring bank.
Many gateways provide tools to automatically screen orders for fraud and calculate tax in real time. Tools to detect fraud include geolocation, velocity pattern analysis. It also includes OFAC list lookups, ‘black-list’ lookups, delivery address verification, computer finger printing technology, identity morphing detection.