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What’s The Difference Between Payment Gateway And Payment Processor

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Part of every business process is providing means to handle financial transactions. With the advancement of technology, owners now have the chance to use payment processing chains to facilitate credit payments. Before trying to integrate these tools, it is important to know the features that help you organize and manage transactions. Here are specific distinctions between a payment processor and a payment gateway.

Payment Gateways

One important concept related to payment processing is payment gateways. The term refers to a process where customers have the chance to purchase items using debit or credit card. Gateways purpose is to provide a system that acts as a mediator between your business and the payment processor. It is the same as a point of order (POS) system that helps complete the transaction.

Equally significant in payment gateways is the capacity to provide secure transactions for customers. Since the system receives the personal information from customers, the data should always follow specific procedures and standards. Specifically, transmission adheres to the Payment Card Industry Data Security Standard (PCI-DSS) which performs annual audits and certification for every gateway.

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Payment Processors

Another concept that manages financial transactions is payment processors. The term refers to the particular financial institution that handles the services related to purchases from online sellers or merchants. Their primary role is to handle payment processing duties and allows the transaction to occur. They have the necessary system and tools to address sending and receiving money by data transmission from the issuing bank, acquiring bank, and you. Note that the issuing bank is the financial institution that handles the credit card of the customer while the acquiring bank is the merchant your business uses.

Also, there are specific payment processors that offer merchant services for your business. However, their objective is to handle payment processing services. These providers do not advertise their activities. Rather, they engage in partnership with independent sales organizations (ISO) and Member Service Providers (MSPs). Such connections allow processors to complete tasks in the background.

Understand Merchant Accounts

Finally, there is also the concept of merchant accounts that link with both payment gateways and payment processors. The term refers to the account of your business to accept debit or credit card using the Internet. Merchant accounts are available from large banks and some companies that specialize in payment processing. When you consider a provider, take note of their transaction fees and rates that can impact your business. Again, it is essential to compare these options before deciding which one works best for your needs.

Overall, the points above help identify the difference between payment processors and payment gateways. Gateways are created as a mediator and help address issues of data security. Processors, on the other hand, handle transfers of payments from the customer to the recipient. Merchant accounts are also significant because it gives you the chance to receive debit card and credit card payments. Although they are part of the financial process in online transactions, each one represents an essential part in facilitating the needs of customers and businesses.

There are more things to consider when talking about payment processors. Find out more at There are also outdated technologies you are using that might need some upgrading. There’s a good discussion about those at
Don’t know the difference between a Payment Gateway and a Payment Processor? Let us explain it to you at
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