Payment Gateways 101

If you want to accept credit card payments through Saffire, you’ll need an integrated payment gateway. 

What is a Payment Gateway?

A payment gateway is the mechanism that reads and transfers payment information from a customer to a merchant’s bank account. Its job is to capture the data, ensure funds are available and get a merchant paid. Online, a payment gateway is cloud-based software that connects a customer to the merchant. In person, it’s the software built into a point-of-sale (POS) system or card reader that processes a transaction when the cardholder uses their card to make a payment.

How does a Payment Gateway work?

The process includes all of these stakeholders...

  • Merchant: The business or person making the sale.
  • Cardholder: Your customer making the purchase.
  • Issuing bank: The financial institution that holds the customer’s account, either a credit card account or a checking account connected to a debit card.
  • Card schemes: The credit card companies that manage the card, like Visa, Mastercard or American Express.
  • Acquiring bank: The financial institution that holds the merchant’s account.

The process flows like this...

  1. the cardholder begins by completing a purchase through your site's shopping cart
  2. the gateway checks with the issuing bank to make sure funds are available in the customer's account.
  3. the gateway sends encrypted card details to the appropriate card scheme
  4. the card scheme approves the transaction and notifies your site's shopping cart
  5. the gateway sends the details to the acquiring bank to move money from the customer's bank into the merchant's account

  The entire process happens within just a few seconds.

Saffire integrates with several Payment Gateways which operate as Hosted services for off-site payments. This means that when a customer makes a purchase through Saffire, the payment information goes to the payment provider's servers for processing, and the Gateway manages the settlement.

Note: the customer's credit card number is not stored by Saffire. We do capture the name, address & email, in addition to all purchase details for each online transaction. The customer information is optional for in-person transactions.

Payment Gateway vs. Payment Processor

The term “payment gateway” is often confused or combined with the terms “payment processor” and “payment service provider,” but these are three distinct things.

payment processor transfers information between the issuing and acquiring banks to move money into your merchant account, but it requires a payment gateway to communicate across the other moving parts and authorize the transaction.

payment service provider, like PayPal, includes a payment processor and a payment gateway, as well as a merchant account and often other features to handle all aspects of a transaction.


Payment gateway costs depend on which provider you use. You may pay monthly service fees, set up fees, transaction fees, and additional fees for things like chargebacks and cancellations. Payment service providers tend to come with fewer fees but possibly take a higher percentage per transaction. The fees Saffire charges do not include those incurred by the Payment Gateway or your merchant account. 

Click here to see the Payment Gateways compatible with Saffire

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