Merchant Accounts vs. Payment Gateways Explained in Simpleby Sahil Verma SIFIPAY
Understanding the world of payments can be difficult. To complete a transaction or process a check, many different financial players and parts are involved. Some of these actors are entirely internal, while others are more outwardly focused. Regardless, in order to run a successful platform, your company must grapple with these terms and techniques. This blog will explain the distinction between two primary payment processing functions: merchant accounts and payment gateways.
What’s the Difference Between Merchant Accounts and Payment Gateways?
An online payment gateway is an essential component of eCommerce. Customers can enter their credit card and bank information online. This function, depending on the platform, will allow businesses to process payments, attract new clients through offers/discounts, and make the transaction seamless. Payment gateways' importance in today's market cannot be overstated. It makes no difference how big or small your company is: if you don't offer convenient payment options when it's time to make a purchase, you'll lose customers.
How Do They Work?
With an online transaction, the first step is to submit payment information via your website's integrated shopping cart or secure hosted payment form. The information is then sent to the payment gateway, where it is encrypted and sent to the third-party payment processor. The payment processor routes all of your information through the card or ACH network for authorization before forwarding it to a bank for approval. The payment is processed once the transaction has been approved.
Finances are the lifeblood of any business. A merchant account allows you to accept credit card and bank payments from customers. Transactions with a merchant account are processed electronically 24 hours a day, seven days a week! A merchant account allows businesses to focus on their day-to-day operations rather than the complexities of payment processing. A merchant account is a must-have for increasing sales and cash flow. Helping you manage your finances can also help you keep the lights on while remaining competitive in this difficult market! Specific industries necessitate a high-risk merchant account to avoid having funds held or being terminated. Fantasy sports is an example of a high-risk industry due to the numerous regulations that apply to this type of business.
Payment Gateway vs. Merchant Account
To process payments online, you must have both a payment gateway and a merchant account, but as previously demonstrated, they do not have the same functionality. The former facilitates transactions, whereas the latter processes and deposits funds into your bank account! Because the two work together to process your transactions, one cannot function without the other. Rather than viewing the two as payment gateways vs. merchant accounts, think of payment gateways as bringing payments to and from the merchant account's slopes. As a result, finding the right merchant account and the best online payment gateway for your company can be difficult.
Choosing the Right Merchant Account & Payment Gateway
Choosing a payment gateway is critical because it is the first step in establishing your company and ensuring that everything runs smoothly. Some gateways, for example, only work with certain types of merchant accounts or banks; if you want to accept payments from multiple customers on different websites (or even over the phone), make sure that any potential fits meet those requirements! There are numerous other factors to consider, such as processing fees, which may vary depending on who offers them at the time of choosing between two competing providers.
Created on Jun 22nd 2022 06:22. Viewed 65 times.