This guide provides an overview of the payment gateway diagram, explaining its components and how they interact to facilitate secure transactions.

Components of a Payment Gateway

A payment gateway is a service that processes credit card and other forms of electronic payments for online businesses. The diagram below illustrates the key components and their roles:

  • Merchant: The business that sells products or services online.
  • Customer: The person or entity making the payment.
  • Payment Gateway: The technology that securely transacts the payment between the merchant and the customer.
  • Payment Processor: The financial institution that processes the payment transaction.
  • Acquirer Bank: The bank that holds the merchant's funds.
  • Issuer Bank: The bank that issued the customer's credit card.

How it Works

  1. Customer Initiates Transaction: The customer selects a product or service and enters their payment information.
  2. Merchant Submits Transaction: The merchant submits the transaction to the payment gateway.
  3. Payment Gateway Validates Transaction: The payment gateway checks the transaction for fraud and ensures the card is active.
  4. Payment Processor Processes Transaction: The payment processor sends the transaction to the issuer bank for authorization.
  5. Issuer Bank Authorizes Transaction: The issuer bank authorizes the transaction and sends a response back to the payment processor.
  6. Payment Processor Sends Response: The payment processor sends the response back to the payment gateway.
  7. Payment Gateway Notifies Merchant: The payment gateway notifies the merchant of the transaction status.
  8. Funds Deposited: Once the transaction is authorized, the funds are deposited into the merchant's account.

Diagram

Payment Gateway Diagram

For more information on payment gateways, check out our Payment Gateway Best Practices.