Credit card payment on a swipe or chip reader app on a tablet used by small or online businesses. The electronic device is used as a modern cash register or for banking.
Are you considering accepting payments for goods or services online? Before you set up your account, you need to choose the right payment gateway vs payment processor. Both are important to your business going forward.
Too often, people get confused between these two terms. They seem somewhat similar and yet different in their operations. With the right knowledge, you can use both to create a formidable online selling business.
Here are the differences between a payment gateway vs payment processor.
Contents
A payment gateway is a software application that securely links a website or mobile device to a payment processor. This linkage provides a means for end-users to enter their payment information. It is then encrypted and passed through to the payment processor for authorization.
It allows businesses to accept online payments. It authorizes credit card payments for e-commerce transactions. It also encrypts sensitive information, such as credit card numbers. It ensures that information is passed securely between the customer and the merchant.
A payment processor is a company that handles EFT between a merchant and the customer’s bank. The processor is responsible for ensuring that the customer’s account is debited or credited. Payment processors typically handle transactions for brick-and-mortar businesses, as well as online businesses.
There are a few key differences between payment gateways and payment processors. Let’s cover an overview of these key differences.
Payment gateways are responsible for authorizing credit card payments for online businesses. Payment processors handle the back-end processing of those transactions.
Gateways are integrated with merchant accounts, whereas processors are not. Gateways also offer more features and options than processors. It can accept alternative payments like PayPal or Apple Pay.
Payment gateways are focused on security, while payment processors focus on transaction management. Payment gateways are used by businesses that sell online. On the other hand payment processors are for all types of businesses.
Payment gateways are responsible for authorizing credit card payments for online businesses. On the other hand, payment processors handle the back-end processing of those transactions.
Payment gateways handle the authorization and settlement of electronic payments. While payment processors handle the actual processing of electronic payments.
Payment processors typically work with banks to provide merchant accounts for businesses. It allows businesses to accept credit cards and electronic payments.
Payment Gateways can connect to multiple payment methods. When it comes to alternative payment methods, payment gateways are typically more flexible. Many payment gateways will allow you to accept payments via:
Payment Processors, on the other hand, can only connect to one payment method. This is because they are designed to be used by businesses that accept offline payments. This means that they can only connect to one payment method, such as credit cards.
The type of business you have will determine which of these two types of businesses you need to use. If you have an e-commerce business, then you will need to use a Payment Gateway. If you have a brick-and-mortar business, then you will use a payment processor.
Payment processors typically charge a per-transaction fee, along with a monthly service fee. Payment gateways typically charge a monthly fee, along with a per-transaction fee.
Some payment processors will also charge a fee for gateway services. While some payment gateways will include processor services in their monthly fee.
Perhaps the most obvious benefit is that it allows businesses to accept payments online. This can be very convenient for businesses that do a lot of their business online.
In addition, using a payment gateway or processor can help improve cash flow. It speeds up the transactions and makes them more efficient. Finally, it can also help to provide security for both the business and the customer.
Businesses nowadays have relied on online transactions. A payment gateway and a payment processor work together to make it convenient for you to pay online.
Customers don’t have to go to a bank to process their payments. Purchases are done quickly and easily. Customers don’t have to enter their payment information each time.
Payment gateways typically provide more features and options for businesses. It can accept credit cards, debit cards, and bank transfers. You can quickly and efficiently transfer funds, thus improving a business’ cash flow.
Increased security is one of the benefits of payment gateways and payment processors. When it comes to payment gateway security, businesses need to consider the encryption used to protect data.
Payment processors also need to have robust security measures in place. They also need to provide chargeback protection and dispute resolution services.
Both payment gateways and payment processors provide increased security for online payments. They do so by encrypting the data and using secure sockets layer (SSL) technology.
Payment gateway providers have a higher level of protection. They use advanced security measures such as fraud detection and prevention tools.
Payment processors, on the other hand, are not responsible for preventing fraud. They only process the transaction and do not provide any additional security.
If you’re not sure whether you need a payment gateway or a payment processor, the best way to decide is to think about what type of business you have. Also, consider the type of payments you need to accept for your business.
If you’re selling online, you’ll need a payment gateway to process credit and debit card payments. If you’re selling in person, you’ll need a payment processor to accept mobile payments.
Now that you know the difference between a payment gateway vs payment processor, you can make an informed decision about which one is right for your business.
Interested in learning more about taking your business to the next level? Check out the latest from our blog to find all the answers you need!
In the dynamic realm of online trading, where every click counts and every decision could…
Bewilderment and interest in the daily lives of contemporary prostitutes have increased in recent years.…
As covered by Trstdly, the enchanting world of Harry Potter, with its captivating tales of witchcraft,…
Car accidents can turn an ordinary day into a whirlwind of paperwork, phone calls, and…
Today's medical industry is constantly changing. New technologies and treatments are continually emerging, and patients'…
The first things that spring to mind when planning a trip with loved ones are…