What is inside a payment gateway (merchant side)

Hi all,

I am a product manager (not a software developer) trying to get a better understanding of payment gateways.

When I say payment gateways I mean the payment gateway that is developed on the merchant side. I do not mean payment service provider the merchant is connected to (Paypal, Stripe, WorldPay, Adyen etc.)

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Please have a look at the following illustration:

https://drive.google.com/open?id=1xpK9k7yTMK5mbl5AGdb3lii5-KaSHHS0

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The research I have done so far:

Unfortunately, so far the research I have done did not help too much. Most of the articles are too high level and the authors do not seem to know the difference between payment gateways and payment service providers.

I understand that especially in North America the term payment gateway is synonymous with the payment service provider.

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My question:

If a merchant wants to process payments they need to integrate with a payment service provider (Paypal, Stripe, WorldPay, Adyen etc.). The payment service provider connects to the acquirer and then via the card scheme to the customer’s bank to authorize the payment.

In order to integrate with the payment service provider, most merchants built a payment gateway on their end to make that integration happen.

What is inside this gateway and what does it do?

Is it an accumulation of APIs?

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Before the payment gateway communicates with the payment service provider it already received some instructions form internal fraud control which can result in showing or not showing certain payment methods, but apart from that, what does it do?

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Also, I understand that this a complicated module on every e-commerce website. I am looking to get a deep-dive. hence, if it would take too much time to explain, please feel free to just paste links to papers or sites that carry the information. I could not find anything myself.

Thank you in advance.

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best,