What Is a Payment Gateway?

A payment gateway handles payment card transactions on a merchant's behalf. On payment gateway vs. payment processor, the glossary of the PCI Security Standards Council, which maintains the Payment Card Industry Data Security Standard (PCI DSS), gives both names to one entry: a payment processor is sometimes referred to as a payment gateway. That glossary defines the parties a card payment passes between:

• Merchant. Any entity that accepts payment cards bearing the logos of a participating payment brand as payment for goods or services.
• Payment processor. Sometimes referred to as a payment gateway or payment service provider (PSP): an entity engaged by a merchant to handle payment card transactions on its behalf.
• Acquirer. Also called the merchant bank or acquiring bank: typically a financial institution that processes payment card transactions for merchants.
• Issuer. The issuing bank, or another entity that issues payment cards.

In a card payment, authorization completes when the merchant receives a transaction response, for example an approval or a decline. The PCI glossary lists payment gateways among service providers: businesses directly involved in the processing, storage, or transmission of cardholder data on behalf of another entity.

Shopify supports two types of credit card payment providers:

• Direct providers. Customers complete their purchases directly on your online store, without paying at a third-party checkout.
• External providers. Customers complete their purchases on a checkout page that's hosted outside of your online store.

Shopify describes Shopify Payments as the simplest way to accept payments online. With it, you're automatically set up to accept all major payment methods, without setting up a third-party payment provider or merchant account. Shopify Payments is only available to online stores in certain countries and regions.

You can also choose from over 100 third-party credit card payment providers, as your sole processor or alongside Shopify Payments. Third-party transaction fees apply to all transactions processed through third-party and alternate payment gateways, even when Shopify Payments is activated. If your store is based in the United States and Shopify manages your US sales tax, you can't use third-party payment providers until you set US sales tax to Self-directed.

Shopify notes that B2B orders are typically larger and not always paid at time of checkout, so you can collect payment upfront or later on orders with payment terms. That changes what the gateway has to do:

• Shop Pay. Shop Pay, Shop Cash and Shop Pay Installments are incompatible with Shopify B2B.
• Vaulted cards. B2B customers can vault a credit card to a company location, and all customers with permissions for that location can use it at checkout. Credit card vaulting is available only to merchants that use Shopify Payments.
• Cards at the end of the term. On an order with payment terms, the customer can choose the card to charge at the end of the term. The card isn't charged automatically when the terms expire; you charge it from the Shopify admin or with Shopify Flow.
• ACH and manual methods. With Shopify Payments, you can accept Automated Clearing House (ACH) bank direct debit payments. Manual methods such as bank transfer are recorded on the order in your Shopify admin after you receive the payment.

A distributor sells on Shopify B2B to 2 kinds of accounts. A small account pays by card at checkout: the gateway returns an approval and the order is paid. A contractor on net 30 terms places a $4,800.00 order and selects its vaulted company card to be charged when the terms end. On day 30, the distributor charges that card from the admin, and the gateway authorizes the $4,800.00 then.

Uncap's guide to B2B ecommerce payments puts the gateway choice in B2B terms: card vaulting is available only to merchants that use Shopify Payments, and for merchants using third-party payment gateways, PCI compliance requirements depend on the gateway and integration method. Uncap configures native net payment terms, vaulted cards, Shopify Functions payment customizations, and real-time ERP integration via Uncap Connect.

• ACH payment
• Purchasing card
• Net 30
• Accounts receivable
• Order to cash

• PCI Security Standards Council: Glossary
• Shopify Help Center: Third-party payment providers
• Shopify Help Center: Setting up payment methods for your B2B business