DEFINITION of 'Payment Gateway'

A means of authorizing credit card or other forms of electronic payments. These e-payments can be made online or offline via a website or at an actual brick and mortar retail establishment. Payment gateways help to protect sensitive information like credit card numbers and other account information by encrypting the data they transmit to merchants and payment processors.

BREAKING DOWN 'Payment Gateway'

Not all companies that build storefronts or facilitate clients in the usage of shopping carts implement payment gateways. The service providers usually charge the retailer a monthly service charge or take a percentage of all sales, sometimes both.

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