A payment gateway protects the customer’s sensitive payment data, as it relays it from the merchant to the acquirer and then the issuer using data encryption. The gateway follows several strict procedures for securing data that are defined by the PCI-DSS compliance standard, which also includes annual audits and recertifications to ensure the standard's validity.

How Do Payment Gateways Work?

• A payment gateway acts as the central cog in the payment processing system, whether you are making a purchase online or in-store.
• Within a transaction, it is the front-end mechanism that collects, transfers and authorizes customer information in real-time to a merchant’s bank, where the transaction itself is then processed.

Main Types of Payment Gateways

There are generally three types of payment gateways:

On-site payments :- Large-scale businesses tend to use on-site payments handled on their own servers where the checkout experience and payment processing all work through your system.

Checkout on site, payment off-site :- Through this method, the front-end checkout will occur on your site, but the payment processing happens through the gateway's back end.

Redirects :- Redirects often include options for alternative payment methods, such as a company allowing the use of Other Payment Gateway. When the gateway takes a customer to a Gateway payment page to handle the complete transaction, it becomes a Redirect.

What are high risk payment gateways?

High-risk payment gateways are merchant account providers or or platforms available for companies that work within industries or fields labeled as “high-risk.” These industries range from CBD and cannabis to the adult entertainment business.

Because of the volatility and bad publicity that can come from high-risk industries, many gateway providers decline to offer their services — which has led to the growth of high-risk gateways with no such problem.