Your payment gateway is the link between your online store and your merchant account.

In order to receive credit card payments online, many organisations use a combination of a merchant account and a payment gateway.

Consider the way that an EFTPOS terminal allows shopkeepers to accept card payments from customers in the physical world. These funds are then transferred to the shop’s merchant account.

In much the same way, a payment gateway allows you to readily accept credit card payments from customers online. Essentially, a payment gateway is the link between your online store and your merchant account.


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Payment gateways vs third-party processors

Third-party processors, like PayPallink and Amazon Paymentslink, may allow you to receive credit card payments online without a merchant account and payment gateway.

Many new e-commerce websites choose to start with a third-party processor. A third-party processor is generally cheaper in the short term, and easier to set up, than a merchant account and payment gateway combination. Other e-commerce websites choose to use a payment gateway and direct merchant account as they are likely to be more cost effective in the long term.

How do I choose a payment gateway service?

There are many payment gateway service providers in Australia. When you are selecting one, it is a good idea to consider:

  • The ease of setting it up with your site.
    If you are using an e-commerce software package, its website should tell you which payment gateway services are supported by your software package.
    If you are working with a developer, the gateway provider will usually provide instructions for them to establish the appropriate connections and, when required, Secure Sockets Layer (SSL) certificates.
  • The provider’s online service portal, which is where you can log in to see your transactions, make reversals and refunds.
    The easier it is for you to perform services such as refunds, the easier it may be to ensure you meet customers’ expectations. It is important to protect your access details for the payment gateway’s merchant service extremely carefully so unauthorised people cannot perform refunds.
  • Whether the provider supports the bank that holds your merchant account.
  • The reputation of the provider.
  • The costs—any set up fees and combination of periodic and transaction fees. If you can estimate the number of transactions you expect in a given period you may be able to estimate the total cost and compare between providers.

The benefit of payment gateway services is that they should transfer the payment information securely. Some will also include additional features to increase their chances of detecting fraud.

If you are using an e-commerce software package, it is a good idea to check whether or not your package comes with a payment gateway service.

For a review of some of the online payment options in Australia, see the website Payment Gateway Reviews in Australia.