How Payment Gateways Work (PayPal / Razorpay Flow)

Introduction

Introduction

Online payments are the backbone of modern digital businesses. From eCommerce websites to SaaS platforms and online tools, payment gateways make it possible to accept money securely over the internet. Yet many developers and business owners don’t fully understand how payment gateways actually work behind the scenes.

In this article, we’ll explain how payment gateways work, with a clear and technical explanation of PayPal and Razorpay payment flow. This guide is beginner-friendly but detailed enough for developers and startups.

What Is a Payment Gateway?

A payment gateway is a technology that securely transfers payment information from a customer to the bank and back to the merchant.

In simple terms:

It collects payment details

Encrypts sensitive data

Sends it for authorization

Confirms success or failure

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Examples of popular payment gateways include PayPal, Razorpay, Stripe,…