Payment gateway
In one sentenceA service that connects an online store to banks and card networks to process payments over the internet, then transfers the amounts to the merchant after deducting its fees.
Simply put
When a customer buys from your online store and pays by card, the transaction passes through the payment gateway, which verifies it, then collects the amounts and transfers them to your account in batches.
Correct accounting: record sales at their gross amount and the fees as a separate expense with their VAT. Do not record the net amount that reached the bank as if it were the sales.
Worked example
An online perfume store sold 100,000 SAR through the payment gateway during a month, assuming fees of 2.5% for illustration, which carry 15% VAT.
Sales through the gateway100,000 SAR
Gateway fees100,000 × 2.5% = 2,500 SAR
VAT on the fees2,500 × 15% = 375 SAR
Net transferred100,000 − 2,500 − 375 = 97,125 SAR
Amount reaching the store's account97,125 SAR
Formula: Net = sales − fees − VAT on the fees
Don't confuse it with
POS settlementThe POS settlement comes from the payment terminals in the shop, while the gateway is for payments over the internet.