How Digital Payment Gateways Handle Card Transactions

What Is a Digital Payment Gateway?

A digital payment gateway is the technical middle layer between a merchant (online shop, app, subscription service) and the card networks and banks that move money. It collects payment details securely, builds an authorization request, sends it to the processor or acquiring bank, and returns an approve/decline outcome.

Gateways are not the same as card issuers or wallets. They do not decide your credit limit or interest rate. Instead, they focus on connectivity, security and routing – making sure a payment request is formatted correctly, encrypted and sent to the right place.

From Checkout Click to Authorization

A typical digital gateway flow looks like this:

1. Checkout – You enter card details or select a stored card/wallet.
2. Tokenization – The gateway replaces raw card numbers with a token for storage.
3. Authorization request – Data is packaged and routed to the processor/acquirer.
4. Network & issuer checks – Card network and your bank run balance, risk and limit checks.
5. Response – Approved or declined, with a reason code.
6. Capture & settlement – Later, the merchant captures funds and they settle to its account.

Gateways may add their own fraud checks before submitting to the network – for example, blocking obvious misuse or asking for additional authentication when a risk score is high.

Fees, Pricing Models and Risk Management

Payment gateways usually charge merchants using one or more of these models:

• Per-transaction fee – a fixed amount plus a percentage of the transaction.
• Monthly platform fee – for access to the gateway and tools.
• Blended rate – one simple %, regardless of card type or network cost.
• Interchange++ – pass-through of underlying network costs plus a gateway markup.

Gateways and processors also share risk around chargebacks and fraud. Some offer risk-management tools such as:

• velocity checks (too many transactions in a short period)
• device fingerprinting and geolocation checks
• 3-D Secure or similar step-up authentication flows
• blacklists/whitelists based on prior behaviour

These tools help merchants reduce fraud but can also cause friction if tuned too aggressively, resulting in more declined legitimate payments.

How Gateways Integrate With Apps and Websites

From a business or developer perspective, digital gateways expose APIs, SDKs and hosted checkout pages so you do not need to build card-processing logic from scratch. Typical integration patterns include:

• Hosted payment page – redirect to the gateway’s secure page.
• Embedded card fields – gateway-hosted input fields inside your checkout.
• Direct API integration – full control for large merchants and platforms.

Gateways often bundle extra features around subscriptions, invoicing, payouts and alternative payment methods (wallets, bank transfers, local payment schemes) so merchants can manage everything from a single dashboard.

Gateway Features to Compare

For broader context on payment technology and card features, see the Technology & Payments hub on Choose.Creditcard .

Explore Related Payment Technology Topics

Part of The CreditCard Collection

DigiPay.Creditcard is part of The CreditCard Collection – a network of focused minisites operated by ronarn AS. Each site explains one piece of how cards and payments work, and then connects you to independent comparison hubs.

We do not operate as a payment gateway or card issuer. This page summarises common patterns in digital payment processing based on public documentation. Pricing, features and regulations change frequently – always consult official sources before making business decisions.

Comparing Payment Technology and Card Features

Use DigiPay.Creditcard to understand what happens behind the scenes when you or your customers pay with a card. Then visit the Technology & Payments hub to see how cards, wallets and gateways fit together in a broader comparison framework.