Payment Gateway vs Payment Processor: The Difference

However, choosing the right payment service provider will require a deep analysis of your business needs and expectations. For example, if you sell goods online, you’ll need a payment processor that supports a range of alternative payment options in addition to bank cards. MONEI is a payment gateway with built-in merchant acquiring services. This means you don’t need to work with an acquiring bank to get a Virtual POS to process card payments.

• Previously, she was a financial analyst and director of finance for several public and private companies.
• This way, you can approve more payments and reduce false online payment failure messages by sending transactions to more than one payment processor .
• Simply put, the payment gateway communicates between all participants in payment processing.
• The payment system will then process and authorize the payment, which will be sent to the payment processor, the entity that carries the money into the seller’s account.
• The payment processor moves the information between the customer’s bank and the merchant acquirer, or acquiring bank.

Before pulling the trigger on a gateway, double-check that they maintain PCI compliance. These are standards put in place to protect customer data and payment information. To ensure secure encryption, you will want to work with PCI-compliant companies. The Payment Card Industry Data Security Standard is a system of standards crafted to uphold security provisions for the electronic world.

Top Payment Gateways

By doing so, you’ll be well on your way to having a good relationship with your payment processor or payment gateway provider. Payment processors will often provide the forex payment gateway physical equipment you need to accept payments, such as the POS terminal. A point of sales terminal reads the data via the EMV chip on the customer’s physical card.

In 2019 WePay launched its product line of Link, Clear, and Core, which it claims solves more integrated payments use cases. When you sell online, there’s no reason to limit yourself to only your local market. As e-commerce becomes more global, you may need to attract, nurture, and sell to customers internationally. That means your payment gateway should make it simple to accept more than just your local currency.

Payment Gateway vs. Payment Service Provider: What’s the Difference?

Customers can use alternative payment options such as PayPal, Venmo or Apple Pay to make online purchases. Allowing for more options for credit card transactions will translate to more convenience for the customer and less friction at checkout. Redirects often include options for alternative payment methods, such as a company allowing the use of PayPal. When the gateway takes a customer to a PayPal payment page to handle the complete transaction, it becomes a Redirect. A payment gateway acts as the central cog in the payment processing system, whether you are making a purchase online or in-store.

This affiliation means card numbers are secure in online transactions and the chance of a data breach is significantly reduced. It’s important to mention that if a buyer makes multiple purchases with different credit cards, each purchase gets a new card token. Is the entity that will facilitate the entire process, this service can include the gateway, the intermediation with all the players, the payment processing and also the money collection.

What is the difference between a payment processor and a payment gateway?

Through this method, the front-end checkout will occur on your site, but the payment processing happens through the gateway’s back end. Payment processors are an intermediary between your business and the financial institutions involved in a merchant transaction. When your customer swipes their card, the processor takes care of everything, from encrypting their information, sending that information to their bank for confirmation, and finally to your bank. If approved, the funds are then deducted from the customer’s account and sent to the merchant’s bank account.

The customer enters credit card information and initiates the transaction. Jennifer Dublino is a prolific researcher, writer, and editor, specializing in topical, engaging, and informative content. She has written numerous e-books, slideshows, websites, landing pages, https://xcritical.com/ sales pages, email campaigns, blog posts, press releases and thought leadership articles. Topics include consumer financial services, home buying and finance, general business topics, health and wellness, neuroscience and neuromarketing, and B2B industrial products.

Buy Now Pay Later Report: Market trends in the ecommerce financing, consumer credit, and BNPL industry

If you choose a gateway that doesn’t fit your business model, you might end up losing a lot of money and customers as well. The acquiring bank makes the batch settlement request of the credit card issuer. A payment gateway facilitates a payment transaction by the transfer of information between a payment portal and the front end processor or acquiring bank.

A payment gateway can either be hosted off-site (the customer is taken to the payment processor’s website for them to enter their details) or non-hosted . Working with agile providers that keep up with market trends and constantly innovate will help your business cope with changing market conditions. You should also look into how the transaction fees will change in case your sales volume picks up. Boost customer satisfaction and sales by accepting more payment methods. Use MONEI to improve your payment flows, accept a wider range of alternative and local payment methods, and reach more customers internationally.

Payment Gateway Vs. Payment Processor: What’s The Difference?

Customers are redirected back to the merchant’s website after completing the transaction. The content of this article is provided for informational purposes only. You should always obtain independent business, tax, financial, and legal advice before making any business decision. But behind the scenes, there are a number of sophisticated steps and precise systems working together to move funds from buyer to seller — and a payment gateway is part of that magic. The cardholder is the customer purchasing a product or service from the seller. Let’s see how a single click payment system works, its benefits, and how it is related to a one-click checkout.

Ecommerce & Retail

The company offers several free services for which PayPal charges transaction fees. Stripe also makes it easy for merchants to update their payment platforms using just a few lines of code. However, merchants must wait two business days for their payments to deposit to an account, and some in higher-risk industries must wait seven business days. Although the transaction process takes only a few seconds, several steps are accomplished during that brief window of time. Once the customer is prompted to a secure payment page and places an order, the transaction data (credit card number, CCV2 information, etc.) is encrypted and sent to your payment processor through the gateway. The payment processor communicates with the credit card’s issuing bank and retrieves feedback in a form of approval or a declined message.