A payment gateway is a remotely hosted software application that enables merchants to accept credit card and electronic check payments directly from their website. The payment information submitted on the site is captured and securely transmits the transaction data to an appropriate financial institution to process and deposit funds into your merchant account. The funds are then deposited into your bank account. Some payment gateways also include a virtual terminal. This allows merchants to use an optional way of receiving online payments. Using the payment gateway virtual terminal, the merchant can key in transaction data.
Some payment gateways include an automatic recurring billing option, so merchants can submit recurring payment information. Once the transaction is submitted, the payment can be repeated based on a selected schedule. Transactions that where submitted using the automatic recurring billing option can be repeated on a monthly, tri monthly, semi annual and annual basis.