Credit Card Processing Blog
What’s The Difference Between A Payment Processor And A Payment Gateway?

Jan 27, 2016 05:19 PM / by Reliance Star

Payment gateways and payment processors are common terms used in the business world. While you’ve probably heard of them, not many fully understand the difference between them. Although they both are different, they play an important part in online transactions. 
 
Payment Processors
 
A simple way to explain a payment processor is that it’s a messenger. The payment processing company transmits your customer’s card information to your bank and your customer’s bank. If there are enough funds in the customer’s bank account, the transaction will be successful almost instantly. Payment processors also conduct security measures to ensure fraud does not occur. They perform quick checks to make sure the customer’s card information is correct. They are also involved with chargebacks, which is when a customer claims your business conducted an unauthorized charge on their account, or they are not happy with your business. While the customer’s get their money back, you are required to pay the amount plus chargeback fees. 
 
Payment Gateways
 
A payment gateway can be looked at as an online terminal for authorizing and processing online transactions. It acts as an intermediary between your business’ online transactions and the payment processor. Payment gateways are needed because it is illegal to transmit your customer’s information from your website directly to your payment processor for security purposes. An example of a payment gateway would be Payeezy.
 
If you are not interested in expanding to e-commerce then you may not need a payment gateway as they are predominantly used for online transactions. Although adopting e-commerce could up your sales drastically, some prefer to stick to traditional business set ups and payment methods. In those cases, a basic merchant account may be the best bet. For those looking to expand to e-commerce, you should be aware that some merchant account providers are equipped with payment gateways while others use third parties.
 
It’s best to stick with the merchant accounts that provide both since third party gateways can become a headache during disputes. At Reliance Star Payment Services we make it easy. We can provide you with either a basic merchant account or both the merchant account and the gateway in one. Contact one of our certified payment professionals today for more information on our payment gateway, Payeezy.

Topics: Payment Gateway