Payment Gateway vs. Payment Processor Explained

Most modern business owners and operators at some point have to deal with e-commerce transactions for their business. In the process of setting up an over-the-web payment process, chances are you’ve heard of the terms “payment gateway” and “payment processor.” At a glance, the two phrases seem synonymous. They are not. In fact, the payment gateway and the payment processor are two entirely different things. In order to optimize your on-the-internet payment process for security and customer experience while reducing costs, it’s important to understand exactly what these two distinct services are and what they mean for your business’ web presence. This is a closer look at the role that they play in accepting customer payments and moving the transaction balance to your account. The Four Key Players Before understanding the specific role of a payment gateway and a payment processor, it’s important to clarify the four parties that are involved in any…

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Gateway and Payment Processing

What is the Difference Between a Payment Gateway and a Payment Processor?

If you are a business owner, the terms payment gateway and payment processor are likely not foreign to you. In fact, they are likely something you have spent a lot of time thinking about. However, understanding the difference between the two may at times seem difficult. Yet it does not have to be so complicated. The reality is, these similar tools for payment processing are not hard concepts to understand with just a little explanation. So what exactly is the difference between a payment gateway and a payment processor? Let’s find out the answer to that question below. The Four Entities of a Credit Card Transaction Before we look at the difference between payment gateways and payment processors, it is helpful to first look at the different entities involved in a credit card transaction. There is the customer, the merchant, the acquiring bank and the issuing bank. The acquiring bank is…

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