In a hurry? Here's our summary of the top payment gateways out there: 🧐 Summary table: 5 of the best payment gateways Payment gateway Price from Editor's rating Payline credit card's own fees + 0.3% per transaction + $10 per month ⭐⭐⭐ Stripe 2.9% + 30¢ per transaction ⭐⭐⭐ Authorize.Net 2.9% + 30¢ per transaction + $25 per month ⭐⭐ PayPal 2.9% + 30¢ per transaction ⭐⭐ 2Checkout 3.5% + 30¢ per transaction ⭐⭐ 🏁 Our recommendation: In our opinion, the best solution right now is to use Stripe as your payment gateway of choice. It has honest rates, clear pricing, and provides integrations with all of the most popular e-commerce software solutions out there. Alternatively, if Stripe is not available in your country, use PayPal for (mostly) similar experience. We also recommend adding TransferWise on top of your payment gateway for easy handling of payments in multiple currencies. Skip to the bottom to learn why.

Table of contents:

👉 What is a payment gateway?

👉 How does a payment gateway work?

👉 How to pick a payment gateway

👉 Best payment gateways compared

👉 Summary and final recommendation

Let's start with the basics:

What is a payment gateway?

A payment gateway is the middleman between your online store and the payment processor that receives the payment from your customer.

In other words, once a customer enters their payment details on your site, the payment gateway takes care of sending that data securely to the payment processor.

You can think of it like this:

A payment gateway takes care of authorizing the payment and making sure that the data entered is enough to finalize the payment. The gateway protects the details of the credit card by encrypting all sensitive information it holds. This process ensures that personal private details are passed securely between the customer and the merchant.

A payment gateway is part of the “magic” that occurs in the background when a transaction takes place on the web. By sending information securely between the website and the payment processor, and then returning transaction details back to the website, it is a primary component that enables e-commerce stores to function.

If you have an (e-commerce) website and you are interested in accepting credit card payments online, you will need a payment gateway. It is effectively the bridge between your product sales and the customer.

How does a payment gateway work?

The good news is that, as an e-commerce store owner, you don't have to understand how the payment gateway actually works underneath. In practice, all you need to do is pick a gateway and then integrate it with your online store via what's usually a user-friendly setup wizard. After that, it just works and allows you to collect payments from customers.

But just to give you an idea, here's a general look at the steps that take place:

A customer places an order on your website. They enter the cart, proceed to checkout and fill in their payment details. The payment gateway takes the payment information, encrypts it and sends it through a secure channel to the payment processor. The customer gets redirected to the payment processor. The payment processor takes the customer through the steps to finalize the payment. The payment processor verifies if the payment was successful and displays an adequate message to the customer. The customer can return to the online store.

What this means in practice is that the payment gateway is only responsible for allowing the customer to communicate with the payment processor. The gateway is just what the name suggests – a “gateway” that takes the customer's personal information through a secure channel to the payment processor.

How to pick a payment gateway

Here's what to look for in a payment gateway:

Is the gateway supported by your e-commerce platform? Based on which e-commerce platform your store runs on, you might have some payment gateways available but not the others. Setting aside boutique payment gateways, nearly all e-commerce platforms support PayPal, Amazon Pay, Authorize.Net, Stripe, and Square. So you don't have to worry if you want to use either of these. The top-of-the-line e-commerce platforms all work with them no problem – I'm talking about platforms such as Shopify, BigCommerce, WooCommerce, Magento. The way you can check which payment gateways your e-commerce platform works with is by going to the platform's official extension catalog or documentation and looking into the “payments” section. Here's where to begin: The payment gateway extensions in WooCommerce

A list of the payment gateways available in Shopify by country

A list of the payment gateways available in BigCommerce

A list of the payment gateways available in Magento Do you want customers to enter payment details directly on your site? From a technical point of view, there are three ways for you to take payment details from a customer: Payment form on your site, details posted to your server . The smoothest checkout experience from your customer's point of view is to enter their payment details into a normal form on your site. Unfortunately, this is the least secure way of doing things, and you'd need to take very serious security precautions to remain PCI compliant. Unless you're making millions per year, this is not a solution for you.

. The smoothest checkout experience from your customer's point of view is to enter their payment details into a normal form on your site. Unfortunately, this is the least secure way of doing things, and you'd need to take very serious security precautions to remain PCI compliant. Unless you're making millions per year, this is not a solution for you. iFrame or redirect . An alternative to taking payment details directly on your site is to include the checkout form inside a secure iFrame (within a page on your site) or redirect customers to a hosted-outside payment page. It's harder to get the payment form to match the rest of your website with these approaches, but they're also the most secure way of doing things.

. An alternative to taking payment details directly on your site is to include the checkout form inside a secure iFrame (within a page on your site) or redirect customers to a hosted-outside payment page. It's harder to get the payment form to match the rest of your website with these approaches, but they're also the most secure way of doing things. Payment form on your site, details sent straight from the browser via a secure payment gateway (not via your server). This is a form of a middle-ground solution. This is actually how most modern payment gateways work, such as Stripe, for example. With Stripe, your customers can type in their card details into a form on your site, but the data is then taken directly to Stripe's server via a secure channel. The customer's credit card details never pass through your web server. Do you want to work with a single company as payment gateway and payment processor? Payment gateways and payment processors are two different things (more on the differences here). And you do need both in order to enable people to actually buy anything from your e-commerce store. Unless you can afford a merchant account – allowing you to process credit card payments directly (usually not a solution for small to mid-size stores). That being said, it's very common for a single company to not only provide you with a gateway but also handle the payment processing part. This makes the integration easier and minimizes the complexity of your setup. Payment providers such as PayPal and Stripe offer such a combined payment gateway and processor setup (effectively you're using their merchant account). At the same time, some payment providers such as SagePay or PayPoint offer just a payment gateway (the bit of technology that sits between your website and the payment processor). They require you to have your own merchant account. Like I said, getting an account with one of the “combined” providers tends to be easier than getting a merchant account and tends to involve fewer setup pains and monthly fees. The per-transaction fees tend to be higher, however. For these reasons, small merchants may want to start with a combined payment provider. Larger merchants can typically save money by having their own merchant accounts. Do you want to use more than one payment gateway? This is probably the most surprising element of this whole discussion. To make things clear, you indeed can use more than one payment gateway in your e-commerce store. Why? Simple. Your customers might prefer to use a specific payment gateway over the other. What this means in practice is that if you don't offer your customer's favorite payment method, they won't buy from you. The most popular, must-have payment gateway is undoubtedly PayPal. PayPal is available in most countries around the world, and thus allows you to sell internationally. Lots of consumers have PayPal (read our full PayPal review) accounts and many of them prefer to pay by PayPal rather than enter credit card details into yet another website. Even if you don't use PayPal as your main payment gateway, consider offering PayPal as an alternative way for customers to pay. It can also be a good backup in case of any problems with your primary payment gateway or merchant account. What fees are acceptable? Payment gateways and merchant accounts charge various different fees that can include monthly fees, fixed fees per transaction, variable fees based on a percentage of the amount, plus extra fees for things like chargebacks, payments from international cards, and so on. Always make sure to double check that you understand the fee structure with your gateway before you commit to it long term. On the most basic level, in general, you can expect to pay in the neighborhood of 2.9% + 30¢ per transaction. Anything less than that is great! Do you have to commit for a long period of time? Historically, some payment providers have been known to lock merchants into lengthy contracts of two years or more. This can be a problem if you find you're not happy with the provider for some reason after signing up. Other providers are happy to have merchants using them on a monthly rolling contract or even without a contract at all. Those long contracts are usually the domain of smaller payment gateways. Anyway, always make sure you understand which sort you're signing up to. Check with your payment gateway's rules and regulations before signing up. Does the provider have a good reputation? Though sounds like a fairly obvious thing to ask, this can be tough to verify when you read reviews on the web. The fact is that no matter which payment gateway you choose, you will always find a lot of negative reviews all around. There are at least a couple of reasons: Payment gateways handle millions of payments per year. Every once in a while, some of those payments will fail.

People are generally more vocal when they're not happy about something as opposed to when everything is going great. That being said, payment processing is obviously critical to your business, so you'll want to work with a provider who has an overall good reputation in the industry. Some payment providers have had problems with outages. Others have a reputation in some circles for blocking merchants' money without due cause. If you haven't heard of a particular payment provider before, be a little extra careful before signing up with them. In general, you should be okay as long as you pick a large payment gateway and processor that has been in the market for a while. Which features do you need, specifically? Not all payment gateways are created equal. I mean, if all you need is to process one-off payments, then sure, they're similar. But sometimes you might need your gateway to be able to do more: Do you want to charge recurring payments? Useful if some of your products are subscription-based. Or perhaps you want to act as a marketplace and take payments on behalf of sellers who are listing their products on your site. Most payment gateways are quite limited in the functionality they provide, so make sure the payment gateway you're considering has the features you need. Does the payment gateway support the payment methods your target market uses? There is a huge number of online payment methods in use around the world, from the well-known and well-established cards like Visa and MasterCard, to very niche payment methods used in just one or two countries. Each payment gateway supports a different set of payment methods. Make sure you understand which payment methods people in your target market like to use, and choose a payment gateway that supports those methods. If your website doesn't accept your customer's preferred payment method, you will lose the sale. Take a look through your competitors' websites and see which payment methods they offer. Are you in a 'high-risk' business? Some businesses are considered by payment providers to be high-risk. This is generally because of the sector they operate in. Some high-risk sectors include: gambling

adult content

travel

tobacco

debt collection

electronic cigarettes

credit repair

MLM If your business is in one of these niches, you may find many payment providers don't want to work with you. In such cases, you'll need to work with a provider that specializes in so-called ‘high-risk' payment processing.

Five popular payment gateways to consider

Here are the most popular payment gateways in the market, their pros and cons, and the cost involved in working with them:

Note. The payment gateways featured below all check out on the points discussed above, that's why there's only five of them here.