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As a consumer, when you check out of your local convenience store, you swipe your credit card through a point-of-sale device, and your gas, coffee, and donut are paid. But what if you are the retailer and your business is online? It's not like you have a card-swiping device at every customer's PC * there has to be a way for you to process that information. Essentially, that's the job a payment gateway does for online retailers. Roy Banks, president of http://Authorize.net, a leader in the payment gateway industry, explains, "We basically function as the digital version of a hardware point-of-sale terminal.*

What a Payment Gateway Does
They allow online merchants, like eStore owners and auction sellers, to accept credit card payments over the Internet by taking steps to ensure the transactions are legitimate:

1. They authorize the cardholder's credit * that is, they check to ensure that the customer has enough money on their credit card to cover the charges.

2. They place a hold on that amount, so the buyer can*t turn around and spend that same money elsewhere before it gets transferred to the retailer's merchant account.

Says Banks, "A payment gateway is just the technology necessary to consummate a payment transaction.*

A Payment Gateway's Role in Your Total Payment Solution
Many people confuse payment gateways with merchant accounts, but they're two different things. They actually work in conjunction to get your profits into your account; but they play separate roles in your online payment solution.

Your payment gateway and your business bank account aren't linked directly; your merchant account services act, for the most part, as a liaison. When a customer orders a product from your online business, their card is processed via your payment gateway. The money is moved over to the merchant account service, who then transfers those newly captured funds into your business bank account.

3 Tips for choosing a Payment Gateway:
1. Is it PCI-compliant? That means that the company's security has been audited by a third party and found to be up to industry standards. Since payment gateways store all your customers* credit card information (sparing you the stress), it also means you can sleep better at night, knowing your customers* valuable info is safe and sound.

2. Good customer support. *Nuff said.

3. Lastly, it's important that the payment gateway you choose be integrated to the third-party solutions you're planning to use. You want your storefront platforms and shopping carts to be compatible with your gateway.

Payment gateways not only allow you to collect the monies from your sales, many also offer an array of security features, to help you avoid becoming a victim of fraudulent orders. In the end, they make your eCommerce business a less-stressful, more pleasant experience * for both you and your customers.