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If you’re running an online store, you need to have a reliable ecommerce payment system to accept payments from your customers. This typically involves using a payment gateway or online payment processor and they are an important part of every online business.

In today’s world, where almost everything has been digitised, there are a plethora of digital options available for online payments. Therefore, it is imperative that your online store provides online payment solutions for your customers.

Furthermore, it is anticipated that between 2020 and 2025, the value of online payment transactions will increase by over 15%.

However, before choosing an ecommerce payment system for your online business, it is essential to have a clear understanding of how payment gateways and online processors work, the available options, and the essential features that need to be considered.

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What is a payment gateway

A payment gateway is a technology that securely processes payments from customers and transfers the funds to the merchant’s account. Payment gateways typically integrate with your ecommerce platform and provide a seamless checkout experience for your customers. 

How does payment gateway work

When a customer makes a purchase on an online store, the payment gateway encrypts their payment details and sends them to the payment processor for authorisation. The payment processor verifies the payment details with the customer’s bank or credit card issuer to approve or decline the transaction.

Once the payment processor approves the transaction, the payment gateway sends the confirmation back to the merchant’s website, allowing the purchase to be completed.

In essence, a payment gateway serves as the bridge between the merchant, the customer, and the payment processor.

What are the benefits of using a payment gateway


One of the main benefits of using a payment gateway is security. Payment gateways use encryption to protect the customer’s payment information, making it much more difficult for hackers to intercept and steal sensitive data.

Improve conversion

Additionally, payment gateways offer a streamlined checkout process, which can improve the customer experience and increase conversion rates. With an encrypted payment gateway, customers can complete their transactions quickly, easily and safely, without having to navigate away from the merchant’s website.


Furthermore, payment gateways offer merchants access to valuable data and analytics, such as transaction volumes, revenue, and customer behaviour. This information can be used to improve business operations and make data-driven decisions such as conversion rate optimisation.

Payment gateway examples

The rise of digital payments in recent years has given rise to various payment gateways catering to both businesses and consumers.

The Philippines is no exception, and the country has seen the emergence of several popular payment gateways. Here are some of the most widely used payment gateways in the country:


A well-known and widely used payment gateway internationally that allows users to send and receive payments securely through their email address. PayPal can be used to make transactions in multiple currencies, making it convenient for international transactions.

It is also safe to transact on this platform as PayPal offers coverage for both buyers and sellers.


A local payment gateway that enables merchants to accept payments from various channels, including online banking, mobile payments, and over-the-counter transactions.


A mobile wallet (E-wallet) and payment gateway that allows users to store funds and pay for goods and services via their mobile phones. GCash is a popular option for online transactions and is widely accepted by many local merchants.


Another popular mobile wallet (E-wallet) and payment gateway that allows users to pay for purchases, bills, and other transactions via their mobile devices. PayMaya also offers a virtual debit card that can be used for online purchases.


A payment gateway that supports multiple payment options, including credit cards, debit cards, and PayPal. 2Checkout also provides fraud protection and chargeback management for merchants.

These payment gateways have become essential for businesses in the Philippines as they provide a secure and convenient way to process electronic payments.

What is an online payment processor

An online payment processor, on the other hand, is a third-party service that handles the actual transaction between the customer and the merchant. Payment processors may work with multiple payment gateways to offer a range of payment options to customers.

How does an online payment processor work

Step 1: Customer Places an Order

The online payment process begins when a customer places an order on an e-commerce website. After selecting the products or services they wish to purchase, they proceed to the checkout page.

Step 2: Payment Details Entered

At the checkout page, the customer is required to enter their payment details, including the payment method they wish to use and their billing information.

Step 3: Payment Processor Verifies Transaction

Once the customer enters their payment details, the online payment processor takes over. The payment processor will verify the transaction to ensure that the payment details are correct and that the customer has sufficient funds to complete the transaction. If the payment processor finds any discrepancies, the transaction will be declined.

Step 4: Payment Processor Sends Request to Issuing Bank

If the payment processor confirms the transaction, it sends a request to the customer’s issuing bank to authorise the payment.

Step 5: Issuing Bank Authorises Payment

The issuing bank will receive the payment request from the payment processor and will check if the customer has sufficient funds to complete the transaction. If the funds are available, the issuing bank will authorise the payment and send a confirmation to the payment processor.

Step 6: Payment Processor Sends Confirmation to Merchant

The payment processor will receive the authorization from the issuing bank and will send a confirmation to the merchant that the payment has been accepted.

Step 7: Payment is Settled

Finally, the payment processor settles the payment by transferring the funds from the customer’s account to the merchant’s account. This process usually takes a few days, depending on the payment method used.

What are the benefits of using an online payment processor

Increased sales

By accepting a variety of payment methods, including credit cards, debit cards, and e-wallets, you can cater to a wider range of customers and increase the likelihood of completing a sale.

Improved cash flow

Online payment processors typically offer faster processing times, allowing you to receive payments quicker, improving your cash flow.

Enhanced security

Online payment processors use encryption technology and other security measures to protect sensitive customer information and prevent fraud, giving your customers peace of mind when making a purchase.

Streamlined operations

Online payment processors automate many aspects of the payment process, such as payment verification and settlement, saving you time and reducing the risk of errors.

Online payment processors examples


Stripe is a payment processor and software platform designed to facilitate the acceptance of customer payments. By using API integration, Stripe allows for the creation of eCommerce websites with ease.

Additionally, the Stripe payments user interface and Stripe Terminal can be integrated into your mobile app to enable payment acceptance for your business.


Square is a payment processor that is currently owned by its parent company, Block. Customers can easily build a customisable online store and accept payments through their existing website, mobile app, or social media platform.

Square’s payment solutions also include point-of-sale, card reader, and terminal equipment that allows for in-person payments at checkout.

Square terminals offer contactless payment options through near-field communication technology.

What is the difference between payment gateway and payment processor

Once you understand how online payment gateways and online payment processors work, it becomes clear that both platforms share many similarities.

Despite this, the terms “online payment gateway” and “online payment processor” are frequently used interchangeably, even though there are some significant differences between the two.

Online Payment Gateway

A service that securely processes and authorises credit card, debit card, and other electronic payments for online businesses. It acts as a bridge between the merchant’s website and the customer’s issuing bank to facilitate the transaction.

Payment gateway encrypts customer’s payment information and sends it to the issuing bank for verification. Once the bank approves the transaction, the payment gateway returns the authorization to the merchant, allowing them to complete the sale.

Online Payment Processor

A service that enables online businesses to accept payments from customers through various electronic payment methods such as credit cards, debit cards, e-wallets, and bank transfers.

It handles the entire payment process, including authorisation and settlement of the transaction.

The payment processor verifies the transaction to ensure that the payment details are correct and that the customer has sufficient funds to complete the transaction. If the payment processor finds any discrepancies, the transaction will be declined.

In simpler terms, an online payment gateway is a part of the payment process that handles the authorisation of transactions, while an online payment processor is a service that manages the entire payment process from start to finish.

While both the payment gateway and payment processor work together to enable online payments, the payment processor offers a more comprehensive payment solution, whereas the payment gateway is just one part of the payment process.

Choosing an ecommerce payment system

Now that you have a better understanding of the differences between online payment gateways and online payment processors, you may be wondering which option is the best fit for your online business.

In reality, both options are capable of enabling customers to make transactions on your online store.

Rather than trying to determine which option to choose, it is important to identify the key factors to consider when selecting an ecommerce payment system. By doing so, you can make an informed decision that is tailored to your specific needs and objectives for payments, which is a crucial aspect of establishing an online business.

Transaction fees

Some payment gateways and online payment processors may charge higher transaction fees than others, so it’s important to weigh the costs and benefits against your budget before making a decision. 


You want to ensure that your customers’ sensitive payment information is kept safe. Look for payment gateways and online payment processors that use industry-standard encryption and security measures to protect against fraud and data breaches.

Ease of use

Choose an ecommerce payment system that is easy for both you and your customers to use. This includes features such as a streamlined checkout process, mobile compatibility, and support for a range of payment methods.

Final thoughts

Gaining a comprehensive understanding of the differences, functionality, and gateway security will enable your online business to make an informed decision that aligns with your specific needs and goals.

By doing so, you can enhance your customers’ online purchasing experience with an added level of security and speed. So, when it comes to selecting an ecommerce payment system, you should aim for nothing less than the best.

Shopboxo offers a user-friendly platform with built-in online payment options, including popular choices like Stripe and e-wallets such as GCash and PayMaya. With payment processing already in place, all that’s left is to create an online store and list your products to start selling.

Join 70,000+ merchants and build your dream online store with Shopboxo.

– Accept orders on any device
– Drag and drop functionality
– Create your custom menu
– Pre-built themes
– No coding required

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