A payment gateway is a method of payment for website users to buy goods or services via your website. The workings of the payment gateway are integrated into the website (normally via a secure server) so that the user experience is not interrupted by diverting the user to a banks website. Payment gateways are used on all e-commerce style websites.
The website owner would need to set up a payment gateway via an intermediary bank. This is different to commercial or high street backs; kind of similar to a credit card system, in that you are using a third party to handle the money transfer
If you are taking payments through your website, you will need a payment gateway. Whether it is for pence or pounds you will still need to have a payment gateway in place.
Banks did miss the boat on this one, but it was something that IT companies jumped onto. When the internet was developing, online transactions were something that were needed. Paypal was one of the first independents payment gateways to set up; followed by a large variety of others. The fact that IT companies were able to set up and run the IT side of things made them a good contender to provide online banking systems (as banks are more into banking/stocks).
There are a wide number of companies that will offer payment gateways:
There are now dozens of companies like the ones above (that are the best known ones) that offer secure online banking and they can be integrated into you website via using a website developer.
The normal process would be to apply for the payment gateway, they send you T’s & C’s to sign and they do some credit checks. If accepted, they will set you up an account and off you go.
There is normally a set up charge to get things up and running (with can vary from bank to bank) and some will charge a monthly charge. It is common for payment gateways to take a cost per transaction or a % of the value of the transaction.
As more and more payment gateways come onto the market, competition is getting fiercer and the costs are coming down.