A payment processing chain is incomplete without a payment gateway and payment processor. However, for people who want to integrate with payment processing or payment gateway – the two terms can be a tad confusing.
So let’s find the core differences between a payment gateway and a payment processor? Most importantly, which one is feasible for your business?
I hope this blog answers these questions for you, as I will provide some stark differences between the two. Also, in the end, you will know the difference and the one you can choose for your business.
What is a payment gateway?
A payment gateway transmits the data to the payment processor as part of the payment lifecycle. In the case of eCommerce websites, it authorizes all payments for cashless transactions.
You can think of it as a POS (Point of Sales) terminal for your business needs. Simply put, it helps connect the payment to different merchant accounts or credit/debit card companies.
The payment gateways are used by most websites that go cash, not present transactions. During the transaction, the payment terminal authenticates the physical card.
It authenticates digital transactions before forwarding the payment details. However, the authentication is secure but is a prolonged process.
What is a Payment Processor?
The payment processor helps transmit the data between the issuing bank, merchant, and the users. Simply put, you can think of them as credit card machines with the equipment to accept credit card payments.
Also, you will have to set up different merchant accounts to accept various credit cards. Payment processing services let you handle customer transactions online and enable them to buy your products or services.
It relays the payment information from the customer’s end. Besides, if the company charges the payment indirectly, the Payment processor is in charge of rectification. Additionally, it follows all the security measures for safe transactions.
How does Payment Gateway differ from Payment Processor
The payment gateway technology is adept at encrypting and transmitting the details from the point of entry to the payment processor. It also helps to communicate the approval of the decline back to the merchant and is commonly used for eCommerce stores.
However, some users choose the technology to accept payments with a credit card reader. In addition, it can take payments with a POS system and software integration.
The payment gateway is a vital technology for businesses to accept customer payments. There are different payment gateways to choose from based on the unique requirement of each business.
On the other hand, a payment processor is designed to relay the transaction to and from the customer’s card-issuing bank to the merchant’s acquiring bank. Ans is, therefore, necessary for all card-based transactions through a mobile app or in person.
The payment processor makes the transaction between two parties more feasible, as it works in a way that captures the customer’s payment details and relays them to the processor. But the whole process is done in seconds.
Payment processing technology communicates the transactions between you and the customer. It plays the most vital part in the payment lifecycle. Both the processors are dependent on each transaction that takes place in real time.
Which one is the best for you?
As I mentioned above, the most common payment gateway is accepting payment online for products and services. Also, the gateway technology has expanded its base and offers seamless buying from any platform.
Seamless buying has also changed the way of shopping online. During the pandemic, most people shopped online and used digital payment modes.
For an eCommerce, a gateway can be a way to integrate different CRM or accounting software or tools. Although not all merchants and websites have payment gateways, some integrate with payment processing services online, which can be time-consuming if you have issues.
How to choose a Payment Gateway?
It is essential to choose a payment gateway based on modes of payment. As most customers look for a seamless experience, payment methods are crucial.
Plus, having diverse payment options will increase your customers’ comfort with the purchase. It optimizes the checkout and increases conversions.
Always look for payment gateways that provide you with flexible payment settlement cycles. And integration with third-party applications like Magneto and WooCommerce will save a lot of time.
The payment gateway you choose should provide you with a good onboarding experience that takes no time. In addition, global online payment transactions have reached a new high, so international payment support is necessary.
Payment analytics features and timely support are also important. And a platform that offers you a personalized checkout experience will allow you to customize your checkout page.
Additionally, you must ensure that your payment gateway company provides you with a pricing plan that fits your needs.
How to choose a Payment Processor?
You need to look for a payment processor with PCI compliance and ensure that the company you choose meets the compliance requirements of the card industry.
High-profile data breaches and attacks have become common in the digital world. So, looking for a payment processor that provides security and protection is essential.
Plus, the payment processor you choose to sync with your gateway provides complete protection. If you are planning to start your eCommerce store, it’s essential to look for software compatibility. Better compatibility will offer better services.
I hope the blog covered all your doubts regarding the two, but you need to ensure you sync with the important one for your business. It must meet all your business requirements and simplify the entire process with complete security.