Payment Gateway Vs Payment Processor Vs Merchant Account

Merchant accounts are optional you don t need to have one as an ecommerce business.

Payment gateway vs payment processor vs merchant account.

A payment gateway is a software program that acts as an intermediary between the website and the merchant account. If you are reading this article then probably you have already read multiple articles about the differences between payment gateway merchant account and payment processor. There are payment processor that offer direct merchant services but the majority of them provide payment processing. A payment processor enters into a reselling agreement with a payment gateway or a merchant account provider so to offer their services directly to an online merchant.

A payment gateway is a crucial component to ecommerce. As a rule payment processors prefer not to market their services. The payment processor is the company that then takes over authenticating the transaction and relaying information between the acquiring yours and the issuing your customer s bank accounts. A merchant account is the actual account that a business sets up in order to process credit card payments.

In fact the two serve totally different functions. The payment gateway is the technical element. The software that transfers the cardholder s information to the payment processor. It allows your customers to submit payment information via the web.

One of the key benefits is the payment processor links to both the payment gateway and the merchant account and quickly transmits information to and fro in a secure manner facilitating instantaneous transactions for the end users. The merchant account is strictly for approving and denying credit card transactions while the payment gateway feeds the merchant account the actual information that is used to process said credit card number. Payment processor processes the request from the gateway and executes it takes the money from the customer and deposits it in your merchant account or an account managed by a third party merchant account this is where the funds get deposited after a successful transaction. Merchant accounts are provided by a merchant acquirer or acquiring bank which may also be a credit card processor.