Payment Gateway vs Payment Service Provider

They also communicate approvals or rejections to you and your customer. Payment processors work behind the scenes – securely routing data among all the different parties all the way through to settlement of funds forex payment gateway in your bank account. The payment processor electronically notifies the payment gateway of the response received from the issuing bank and facilitates payment by the acquirer bank to the merchant’s bank account.

• For example, in China, Alipay is much more popular than payment options that might be familiar to customers in the US.
• A payment gateway is the technology sellers use to accept payments, transmitting the customer’s payment information to the seller to get the seller paid.
• On top of all that, data communication from the gateway is always encrypted.
• They also communicate the approval or rejection of the transaction, and ensure that the funds are withdrawn from the customer’s bank account and deposited into the merchant’s account.

The issuing bank sends the approval or rejection of the transaction through the payment gateway to you. With BigCommerce, you can choose from more than 65 pre-integrated online payment solutions, serving 230 countries and over 140 currencies. The features and benefits offered https://xcritical.com/ by our industry-leading solutions will make your payment decisions a strategic advantage for your business. Avoid payment gateways with less than stellar security histories to prevent customers from abandoning their shopping carts or going to other, more visibly secure sites.

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Even though payments are usually approved almost immediately, the money is held for a few days before it is settled to your account. These holding periods can vary from 1-7 days depending on the payment service provider. You can choose to wait or get paid immediately, depending on your cashflow.

They contract with back-end processors who handle the actual movement of money behind the scenes. Most importantly, the payment processor does not deal directly with an authenticator; the Payment Gateway plays that role. Thus choosing the right payment gateway is very important to keep your customer’s sensitive data securely. The merchant account bank sends a request to the customer’s card-issuing bank to verify the card holder’s identity and the transaction’s validity.

What is my target customer’s preferred method of payment?

A payment processor executes the transaction by transmitting data between you, the merchant; the issuing bank (i.e., the bank that issued your customer’s credit card); and the acquiring bank (i.e., your bank). The payment processor also typically provides the credit card machines and other equipment you use to accept credit card payments. To accept credit cards at your business, you’ll set up a merchant account with a merchant service provider. The right credit card processor can make a big difference in your small business’s revenue and your customers’ satisfaction. However, it’s important to investigate the market thoroughly to ensure you receive the best deal for your business. Understanding the difference between payment processors, payment gateways and merchant accounts is the first step in making your customers’ buying journey less complicated.

These transactions may include payment options of virtual cards in addition to physical cards. Merchants make decisions about accepting payments from which credit card companies. A merchant account is a special account that lets you accept and process digital payments . This includes purchases made with credit or debit cards and other forms of electronic payments.

Integrating Payments with Salesforce

This gives the merchant greater control over their payment experience but it comes with greater responsibilities and costs as well. Overall, online stores will likely need both solutions, while brick-and-mortar shops typically just require a payment processor. WePay is a payments service provider that was acquired by JPMorgan Chase in 2017. The company grew in popularity due to its flexible APIs to help platforms support and monetize payments.

The customer interacts with a Payment Gateway when they enter their payment card information on the checkout page. When they proceed to pay, the gateway encrypts the customer’s personal and bank information so that hackers cannot steal and misuse it. BigCommerce works with more than 65 pre-integrated online payment solutions, serving 230 countries and over 140 currencies. Choosing the best payment gateway option available is dependent entirely on your business, what platforms you decide to sell from and how many channels you choose to sell in.

Security

The main difference is that a payment gateway captures and sends the cardholder’s payment information to the payment processor. It also communicates approved or declined transactions to you and your customers. Braintree-PayPal, Stripe, and Adyen are combined payment gateways and payment processors.

This is necessary since there is no physical interaction between seller and buyer, which in the physical purchase, a person would require a cash register or a credit card machine. Instead, the gateway acts as the tender retrieval, like a cash register. It takes in the payment information electronically so that it can be sent to the seller. The best payment gateway systems are fast, secure, and easy to use. If you do business internationally, you need to make sure that your payment gateway can handle payments in different currencies and from different countries.

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It ensures sure all the details are correct so the sale can be transmitted to the payment processor. Payment gateways are often confused for payment processors, but there’s a distinction. A payment gateway is the technology sellers use to accept payments, transmitting the customer’s payment information to the seller to get the seller paid. A payment processor transfers transaction data, handling the exchange of information between the customer and the seller.

Payment Gateway vs. Payment Processor

If you’re a global business or you’re interested in offering the most modern, flexible payments model available, a full payment platform is the better option for you. In other words, it’s like the online version of the terminals you’d see in a brick-and-mortar retailer store. No matter what industry you’re in, or how big or small your business is, having a payment gateway is a critical part of the payment processing system. With a front-end checkout, the checkout occurs on the seller’s site, but the payment processing takes place in the backend. So, each payment gateway should be a registered payment service provider, but not every payment service provider is a payment gateway.