Merchant accounts vs. payment gateways are often used interchangeably by merchants or in explanations to merchants, but there is a difference between the two services. Merchant accounts and payment gateways are both needed for accepting credit card payments online, but they fulfill different roles in the e-commerce transaction process.
Merchant accounts allow businesses to accept credit card payments directly through the bank. Payment gateways act as an intermediary between the merchant and the credit card processor by providing a secure connection for transmitting customer payment information.
A merchant account is a type of bank account that allows businesses to accept payments by credit or debit card. Merchant accounts are usually offered through third-party providers, such as banks, Independent Sales Organizations (ISOs), or Merchant Service Providers (MSPs).
To open a merchant account, a business must provide information about its company, such as its legal name, address, and contact information. The business must also provide documentation that proves it is legitimate, such as articles of incorporation, tax identification number, or business license. Merchant accounts can be difficult to open, as banks want proof that a business will be profitable and able to pay the monthly statements.
Merchant accounts are beneficial for businesses because they allow them to accept credit card payments from customers directly through the bank rather than having to process those transactions themselves. Merchant accounts also typically have lower rates than payment gateways or third-party processors.
A payment gateway is a secure connection between a business and its credit card processor. Payment gateways allow businesses to transmit customer payment information securely and helps protect against fraud. In order to use a payment gateway, a business must have a merchant account. A payment gateway typically charges a fee for each transaction it processes, as well as a monthly fee.
Payment gateways are beneficial for businesses because they provide a secure connection for transmitting customer payment information. Payment gateways are also typically more affordable than merchant accounts, and they offer a variety of features that can help businesses manage their e-commerce transactions.
Merchant account vs. payment gateway: which is right for you?
Merchant accounts vs payment gateways both have advantages and disadvantages. Merchant accounts give businesses more control over their e-commerce transactions, but they have a low monthly fee compared to most payment gateways. Payment gateways are affordable, but without a merchant account, a business must rely on outside help or software such as PayPal or Square to process payments.
When deciding whether a merchant account or payment gateway is right for your business, it’s important to consider the size and type of your business, as well as your budget. Merchant accounts are best suited for businesses that have a high volume of transactions each month, while payment gateways are ideal for businesses that have a low monthly transaction volume or those that can’t afford a merchant account.
Merchant accounts are more expensive than payment gateways to set up, but typically have lower monthly fees. Merchant accounts also tend to have a higher rate of acceptance than payment gateways based on the transactions they process.
Merchant accounts and payment gateways both have advantages and disadvantages. Merchant accounts give businesses more control over their e-commerce transactions, but they have a low monthly fee compared to most payment gateways. Payment gateways are affordable, but without a merchant account, a business must rely on outside help or software such as PayPal or Square to process payments.
Merchant accounts and payment gateways both have advantages and disadvantages. Merchant accounts give businesses more control over their e-commerce transactions, but they have a low monthly fee compared to most payment gateways. Payment gateways are affordable, but without a merchant account, a business must rely on outside help or software such as PayPal or Square to process payments.
Merchant accounts are more expensive than payment gateways to set up, but typically have lower monthly fees. Merchant accounts also tend to have a higher rate of acceptance than payment gateways based on the transactions they process. When deciding whether a merchant account or payment gateway is right for your business, it’s important to consider the size and type of your business, as well as your budget.
