In this guide: Payment gateways explained: how online payments work, popular gateways like Stripe and PayPal compared, fees and payouts, security and compliance, and…
When a customer clicks “Pay Now,” a lot happens in a few seconds: card details are encrypted, checked, approved, and eventually transferred to your bank account. A payment gateway makes this possible. Choosing the right one affects your fees, conversions, and which customers can pay you.
Note: gateway availability, fees, and features vary by country and change over time. Always check current details for your business location.
How payment gateways work
Key players in an online card payment:
- Customer — pays with a card or wallet.
- Merchant — you.
- Payment gateway — securely captures and transmits payment data from your website.
- Payment processor — routes the transaction between banks and card networks.
- Card networks — Visa, Mastercard, etc.
- Issuing bank — the customer’s bank that approves or declines.
- Acquiring bank — your bank (or the provider’s banking partner) that receives funds.
The flow:
- Customer enters payment details at checkout.
- The gateway encrypts and sends them to the processor.
- The card network forwards the request to the issuing bank.
- The bank approves or declines (checking funds and fraud signals, sometimes asking for 3D Secure verification).
- The result returns to your site within seconds.
- Funds are settled to your account later (the payout schedule).
Many modern providers (like Stripe and PayPal) combine gateway, processor, and merchant account into one service.
Popular gateways compared
Stripe
- Developer-friendly, supports cards, wallets (Apple Pay, Google Pay), and many local payment methods.
- Excellent for subscriptions, marketplaces, and custom integrations.
- Available in many countries (check yours).
PayPal
- Widely recognized and trusted by shoppers; customers can pay with PayPal balance or cards.
- Good for international sales and buyer confidence.
Square
- Strong for businesses with both physical and online sales (POS integration).
Adyen, Checkout.com, and enterprise processors
- Suitable for larger businesses with high volume and global needs.
Regional gateways
Many markets have strong local providers and payment methods — for example, in the Middle East, gateways supporting local cards and wallets (such as mada in Saudi Arabia, and providers like Moyasar, Tap Payments, HyperPay, PayTabs, and others). Local methods can significantly increase conversions for local customers.
Platform gateways
- Shopify Payments and WooPayments integrate directly into their platforms.
Fees and payouts
Common fee types:
- Per-transaction fee: percentage of the transaction plus a fixed amount (varies by provider and country).
- International card and currency conversion fees.
- Chargeback fees when customers dispute payments.
- Monthly or setup fees (less common with modern providers, but some enterprise or regional gateways charge them).
- Payout fees for certain transfer methods.
Payout schedules range from daily to weekly, with initial holding periods for new accounts. Some providers hold reserves for high-risk businesses.
Compare fees using your actual expected transaction sizes and customer locations.
Security and compliance
- PCI DSS: security standards for handling card data. Using hosted fields, redirects, or embedded checkout from reputable gateways greatly reduces your compliance burden because card data doesn’t touch your server.
- SSL/HTTPS: mandatory — see What Is SSL?.
- 3D Secure / Strong Customer Authentication: extra verification steps required in many regions (e.g., Europe) that reduce fraud and shift liability.
- Fraud tools: risk scoring, address verification, and rules to block suspicious transactions.
- Tokenization: stores payment methods securely for subscriptions without keeping card numbers on your site.
Never store raw card numbers on your website. Protect your admin accounts with 2FA, and keep your store updated — card skimming malware targets outdated sites.
Choosing for your market
Ask these questions:
- Is the gateway available for businesses in your country, and can it pay out to your bank?
- Which payment methods do your customers prefer? Local cards and wallets, international cards, PayPal, bank transfers, buy-now-pay-later, or cash on delivery?
- Does it integrate with your platform (WooCommerce, Shopify, custom app)?
- Does it support your business model — subscriptions, marketplaces, digital goods?
- Currencies: can you charge and settle in the currencies you need?
- Fees and payout speed for your transaction profile.
- Support quality and documentation.
Many stores offer two or three options: a local gateway for local cards, an international card processor, and PayPal for international customers.
See how payment choices affect sales in Conversion Rate Optimization: 15 Quick Wins and set up your store with How to Build an Online Store With WooCommerce.
Further reading: OWASP Top 10 web security risks
Key Takeaways: Payment Gateways
- Payment gateways securely connect your checkout to banks and card networks.
- Stripe and PayPal are popular global options; local gateways matter for local customers.
- Compare fees, payout schedules, and supported methods for your market.
- Use hosted checkout fields to reduce PCI burden and enable 3D Secure.
- Offer the payment methods your customers actually use.