What is the difference between a merchant account and a payment gateway?
Posted: Mon Dec 23, 2024 10:35 am
Do I need both a payment gateway and a payment processor?
You might need both a payment processor and a payment gateway in order to accept credit card and debit card payments online. However, you can typically forgo the use of a payment gateway if you only intend to accept credit and debit card payments at a point-of-sale (POS) terminal. Virtual terminals accessed through your computer, though, require a payment gateway even if you only accept payment at the point of sale.
Is PayPal a payment gateway or a payment processor?
PayPal is what is known as a payment aggregator, and it has its own payment gateway, Payflow. You can learn more in our PayPal review. Payment aggregators do not require your business to set up a merchant account, unlike traditional payment processors. Instead, aggregators group your transactions with those of other merchants, essentially making you a submerchant on the aggregator's own merchant account.
Payment aggregators generally have a quick and easy application process and allow for much faster processing times than conventional payment processors. Fees tend to be more straightforward, and aggregators new zealand phone number search are often cheaper overall, depending on the amount and value of your transactions.
Unfortunately, payment aggregators are warier of risks and may place holds on your account if they detect suspicious activity or the increased possibility of chargebacks.
Unlike payment processors, aggregators generally offer fixed rates, so even as your transaction volume increases, the price you pay does not increase. Payment processors, on the other hand, typically offer more favorable rates to businesses with high transaction volumes or high-value transactions.
A merchant account is essentially an arrangement with the bank to create a space for pending transactions where the funds go before they are credited to your business's bank account. It is distinct from a payment gateway in that it doesn't transmit encrypted data, but rather the funds related to the transaction. The payment will temporarily be held in the merchant account as the transaction is finalized, at which point the funds will pass through the merchant account and into your business's bank account.
To set up your merchant account, a payment processing company will assign you a merchant ID number. This number is tied to the merchant account, which holds your funds until the settlement of a transaction. A merchant account is necessary to accept credit and debit card payments from your customers, unless you are operating as a submerchant with a payment facilitator, like Square or Stripe. To learn more, you can read our full review of Square and our Stripe review. So, while a merchant account is distinct from a payment gateway, it is often essential to accept both online and POS credit and debit card payments.
You might need both a payment processor and a payment gateway in order to accept credit card and debit card payments online. However, you can typically forgo the use of a payment gateway if you only intend to accept credit and debit card payments at a point-of-sale (POS) terminal. Virtual terminals accessed through your computer, though, require a payment gateway even if you only accept payment at the point of sale.
Is PayPal a payment gateway or a payment processor?
PayPal is what is known as a payment aggregator, and it has its own payment gateway, Payflow. You can learn more in our PayPal review. Payment aggregators do not require your business to set up a merchant account, unlike traditional payment processors. Instead, aggregators group your transactions with those of other merchants, essentially making you a submerchant on the aggregator's own merchant account.
Payment aggregators generally have a quick and easy application process and allow for much faster processing times than conventional payment processors. Fees tend to be more straightforward, and aggregators new zealand phone number search are often cheaper overall, depending on the amount and value of your transactions.
Unfortunately, payment aggregators are warier of risks and may place holds on your account if they detect suspicious activity or the increased possibility of chargebacks.
Unlike payment processors, aggregators generally offer fixed rates, so even as your transaction volume increases, the price you pay does not increase. Payment processors, on the other hand, typically offer more favorable rates to businesses with high transaction volumes or high-value transactions.
A merchant account is essentially an arrangement with the bank to create a space for pending transactions where the funds go before they are credited to your business's bank account. It is distinct from a payment gateway in that it doesn't transmit encrypted data, but rather the funds related to the transaction. The payment will temporarily be held in the merchant account as the transaction is finalized, at which point the funds will pass through the merchant account and into your business's bank account.
To set up your merchant account, a payment processing company will assign you a merchant ID number. This number is tied to the merchant account, which holds your funds until the settlement of a transaction. A merchant account is necessary to accept credit and debit card payments from your customers, unless you are operating as a submerchant with a payment facilitator, like Square or Stripe. To learn more, you can read our full review of Square and our Stripe review. So, while a merchant account is distinct from a payment gateway, it is often essential to accept both online and POS credit and debit card payments.