Guide to payment gateways: What are they and how do they work?

Key takeaways

• A payment gateway is the technology that collects, encrypts, and transmits your customers' payment information when they buy something online.

• New Zealand businesses have several gateway options, including Airwallex, Windcave, Stripe, eWay, and others, each with different fees, supported payment methods, and platform integrations.

• Airwallex offers an all-in-one payment gateway, processor, and multi-currency account for NZ businesses, with 160+ payment methods, competitive pricing, and like-for-like settlement to cut FX costs.

If you're running an online business in New Zealand, picking the right payment gateway can be a tricky process, but getting it right can lead to more sales and growth for your business. There are plenty of options, and they all come with different fees, features, and levels of support for local payment methods. If you're selling internationally too, it gets even more complicated.

In this article, we'll walk through what payment gateways are, how they work, what fees you can expect, and which gateways are available in NZ. Whether you're just starting out or thinking about switching providers, you'll find the information you need to make a confident decision.

What is a payment gateway?

A payment gateway is a type of digital technology that lets you accept and process online payments. It handles the payment processing that happens after a customer makes a transaction. You can also have payment gateways in the form of physical Point of Sale (PoS) terminals in-store, but when people say 'payment gateway', they're mostly talking about online payment gateways.

Payment gateways let merchants accept payments by credit or debit card, along with other forms of electronic payments like Apple Pay and Google Pay. Digital payments are big in New Zealand, with Kiwi cardholders spending NZ$10 billion on electronic cards in March 2026 (an increase of 1.3% from February)¹. So if you're selling online, the gateway you choose matters. It affects your security, your customers' experience, and your bottom line.

What does a payment gateway do?

Payment gateways do more than just collect card details. Here's what they handle for you:

Connection with payment processor: Payment gateways sit between your checkout and the payment processor. They act as the go-between that moves transaction data from one to the other.

Encryption: Payment gateways encrypt the data customers submit during online checkout before sending it to the other parties involved in the payment processing workflow. That stops malicious parties from intercepting the information whilst it's being sent from one place to another, and it helps make sure standards such as Payment Card Industry (PCI) compliance are upheld.

Authorisation: Payment gateways send this encrypted payment data to the merchant's bank (the 'acquirer'), and then the information goes to the customer's issuing bank or the payment processor. The gateway then checks the transaction details, sometimes using extra authentication like 3D Secure, to make sure the customer has enough money to complete the purchase and is using a valid payment method. The transaction is then approved or declined, and the payment gateway sends that response to the business.

Tokenisation adds another layer of security. When customer details are entered, payment gateways replace them with a string of meaningless symbols, known as a 'token'. The gateway then securely stores and manages the token, so merchants can process future transactions without needing to store or handle sensitive card data.

Fraud prevention: Payment gateways use fraud-detection algorithms, address verification systems (AVS), and card verification value (CVV) checks to help detect online payment fraud before transactions are processed.

Data collection: Payment gateways can also collect transaction data that helps you simplify and improve your payment systems. For example, they can show you the number of chargebacks and declined transactions, so you can make informed strategic decisions about how to deal with those issues.

Payment gateway vs payment processor

Payment processors and payment gateways are often sold together, but they do different jobs. Payment gateway providers offer software that integrates with websites and collects, encrypts, and transmits customer payment information. Payment processors, on the other hand, receive the payment information and send it on to financial institutions and card networks.

How do payment gateways work?

Payment gateways do their job in seconds, so it's easy to miss what's going on behind the scenes. Here's the step-by-step process.

You can think of payment gateways as the 'customer-facing checkout' where customers' payment information is collected. Once the gateway has collected that information, it moves through a number of technical layers involving different parties, including the payment processor, the merchant's bank, the card network, and the issuing bank.

1. Information sent to the acquiring bank: Once the information is collected, the payment gateway encrypts it before sending it to the acquiring bank (the merchant's bank). The acquiring bank then acts as the merchant's financial partner and helps manage the flow of funds for the transaction.

2. The acquiring bank requests authorisation from the card network: The acquiring bank sends the payment request to the card network (such as Visa, Mastercard, or American Express), which then routes the request to the issuing bank (the customer's bank). The issuing bank checks whether the customer has sufficient funds or credit.

3. The payment is either approved or declined: If the payment is approved, the authorisation goes back to the acquiring bank, which passes it on to the payment gateway, letting the merchant know they can complete the transaction. If it's declined, the payment gateway tells the customer they need to try a different payment method.

4. Funds are transferred: Once the transaction is approved, the funds are transferred from the customer's bank account to the acquiring bank, and then to the merchant's account. This transfer can take anywhere from a few hours to a couple of days, depending on the payment method and the financial institutions involved.

5. Merchant receives payment: Finally, the merchant receives the payment, minus any fees.

Each of these steps comes with costs. So next, let's break down payment gateway fees.

Payment gateway fees

Payment gateway fees cover the payment processor provider's costs for the technology and measures needed to securely handle, verify, and process sensitive financial data. Payment gateway fees can be broken down into a few categories:

• Transaction fees: This fee is usually charged as a percentage of each sale plus a fixed amount per transaction. Rates vary by payment gateway provider and payment method (credit card, debit card, etc.).

• Monthly or annual access and maintenance fees: Some payment gateways charge a monthly fee for access to their platform and to cover features like customer support and reporting tools.

• Setup fees: Many payment gateways charge a one-time setup fee to integrate their services with your website or payment system.

• Chargeback fees: If a customer disputes a transaction and initiates a chargeback (a reverse of their transaction), the merchant may incur a chargeback fee. This compensates the payment gateway for the administration involved in managing the chargeback process.

• Refund fees: Some payment gateways charge a fee when they process refunds, to cover the cost of the resources needed to reverse the transaction.

• International transaction fees: For cross-border payments, some payment gateways charge foreign transaction fees for currency conversion, international transactions, and handling different payment methods. These can include both a percentage of the total transaction amount and a fixed charge per transaction.

For a reference point, Airwallex charges 2.60% + $0.30 for domestic card transactions in NZ, and 3.60% + $0.30 for international cards. It's worth comparing the total cost across providers, not just transaction fees but monthly charges and hidden extras too.

With fees in mind, let's look at the payment gateways available in New Zealand.

Best payment gateways in New Zealand

New Zealand businesses have several payment gateway options. Here's a breakdown of the main providers, what they offer, and how they compare.

Windcave

Windcave (formerly Payment Express) is a New Zealand-native payment gateway with a strong local presence. NZ businesses can use Windcave for both online and in-store payments.

• Supports EFTPOS, credit cards, and debit cards

• Integrates with major eCommerce platforms including WooCommerce, Magento, and others

• Offers both hosted payment pages and API integration

• Local support and NZD settlement

Stripe

Stripe is a global payment gateway that's available in NZ, and it's known for its developer-friendly approach and transparent pricing.

• Transparent Stripe fees at 2.65% + $0.30 for domestic cards

• Extensive API documentation and developer tools

• Supports Apple Pay, Google Pay, and major card networks

• Limited support for NZ-specific payment methods like POLi compared to local providers

eWay

eWay is a payment gateway focused on Australia and New Zealand, and it integrates with popular eCommerce platforms.

• Supports Visa and Mastercard, with customised pricing available for other cards such as American Express, JCB, and Discover

• Built-in fraud prevention tools

• Integrates with Shopify, WooCommerce, Magento, and BigCommerce

• NZD settlement available

POLi

POLi is a bank transfer payment method available in New Zealand. It works as a payment method for merchants that want to offer direct bank payments, letting customers pay through their online banking account.

• Lets customers pay directly from their bank account without needing a credit card

• Popular with NZ consumers who prefer not to use cards online

• Lower transaction fees than card payments for some merchants

• Integrates with Shopify, Wix, Xero, and Paystation, with other software partners also available

Airwallex

Airwallex provides a payment gateway, payment processor, and multi-currency accounts on one platform. It's built for businesses that sell both locally and internationally.

• 160+ local payment methods across 180+ countries

• Domestic card rate of 2.60% + $0.30 in NZ

• Like-for-like settlement – collect in A$, US$, or £ and settle in those currencies to avoid forced FX conversions

• Flexible integration options including Payment Links, plugins for Shopify and WooCommerce, and full API access

Payment gateway comparison table

Here's how the main NZ payment gateway providers compare:

How to choose a payment gateway in NZ

With several options available, how do you choose the right one for your business? Here are the key factors to think about.

Fees and pricing

Don't just focus on the headline transaction rate. You also need to factor in monthly fees, setup costs, chargeback fees, and any charges for international transactions. A gateway with a slightly higher transaction fee but no monthly charge could work out cheaper if your volume is low.

Supported payment methods in New Zealand

EFTPOS is a popular in-person payment method in New Zealand, whilst credit and debit cards also tend to dominate online transactions. If you're selling online, make sure your gateway supports the major card networks. You may also want to offer POLi for customers who prefer bank transfers, or buy now, pay later options like Afterpay. The right mix depends on whether you're selling online, in-store, or both.

Platform compatibility

A smooth payment gateway integration with your eCommerce platform matters, whether you're on Shopify, WooCommerce, Magento, BigCommerce, or a custom build. Some platforms come with built-in gateways, but you can often upgrade to a more feature-rich option that suits your needs better.

Multi-currency and international support

If you're selling to customers in Australia, the US, or the UK as well as NZ, you'll want a gateway that settles in each currency. This is called like-for-like settlement, which means you're not losing money on forced FX conversions every time you receive a payment. For NZ businesses with international ambitions, that can make a significant difference to your margins.

Accept payments in New Zealand and beyond with Airwallex

If you're looking for a payment gateway that can handle both local and international transactions, Airwallex brings your gateway, processor, and multi-currency accounts together on one platform. You can accept payments in 130+ currencies with 160+ local payment methods, settle in NZD or hold funds in other currencies, and avoid the hidden fees that eat into your margins.

But Airwallex is more than just a payment gateway. The platform helps thousands of businesses manage their financial operations, from collecting payments to holding funds in multiple currencies, managing FX, and controlling spend with corporate cards. If you're ready to simplify your payments and scale your business, get started with Airwallex today.

Frequently asked questions 

Which is the best payment gateway in New Zealand?

The best payment gateway depends on your business needs, including your sales volume, the payment methods your customers prefer, and whether you sell internationally. Windcave is a strong choice for businesses that need EFTPOS and local support. Stripe appeals to developers who want flexibility. Airwallex suits businesses selling both locally and overseas, with 160+ payment methods and multi-currency settlement.

Do I need a payment gateway?

Yes. If you're selling online, you need a payment gateway to securely process customer payments. A payment gateway acts as the go-between for your online store and the financial institutions that process the transaction. Without one, you can't accept card payments on your website.

What is the most popular payment method in New Zealand?

EFTPOS remains widely used for in-person payments in New Zealand, while cards and digital payment methods are commonly used online.

How much does a payment gateway cost in NZ?

Most payment gateways in NZ use either flat-rate, plan-based, or quote-based pricing. Costs vary by provider, payment method, and whether the payment is domestic or international. Some providers also charge monthly fees.

Can I use a payment gateway with Shopify in NZ?

Yes, Shopify works with several payment gateways in NZ, including Stripe, Windcave, and Airwallex. Shopify also has its own built-in payment processing (Shopify Payments), but third-party gateways can offer more features, better rates, or multi-currency support depending on your needs.

Sources

1. https://www.stats.govt.nz/information-releases/electronic-card-transactions-march-2026/

2. https://www.polipay.co.nz/sell-with-poli/software-integrations/ 

3. https://www.polipay.co.nz/pricing/ 

4. https://www.windcave.com/support-merchant-frequently-asked-questions-merchant-faq#MerchantServiceFees 

5. https://www.windcave.com/integrations 

6. https://go.eway.io/s/article/What-are-Premium-Rates-and-when-Will-they-apply 

7. https://eway.io/nz/online-payments/#pricing

Airwallex (New Zealand) Limited is registered with the New Zealand Financial Service Provider Register (FSP No. 1001602) to provide a range of financial services in New Zealand.