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What is a Gateway?

In short, a gateway connects your ecommerce Website to your merchant account.

The gateway facilitates online payments by connecting your secure order form with your specific merchant account at a processing bank. The gateway takes the submitted form data and presents it to the processing bank. When it receives a response from the bank, it presents that return data to the site of origin for appropriate handling.

The gateway itself doesn't provide ecommerce features such as shopping carts, Web hosting, or merchant accounts, although, as you'll see, many larger gateway providers do offer additional services like these.

While Bodine cited Authorize.Net, Cybersource and VeriSign as the big three in the payment-systems marketplace, vendors such as PayPal and Google have made significant headway into what experts call the alternative payment-solution marketplace. In fact, Google has decided not to charge processing fees through the end of 2007 in order to help its Checkout product reach critical mass.

Google's Checkout system allows consumers to enter billing information one time in order to make online purchases a one-click process on ecommerce sites that have made themselves Checkout-capable. While Google has seemingly eliminated the need for a merchant account with its solution, Bodine cautions that it's not the same as an all-in-one payment gateway/merchant account solution.