As a business owner exploring the world of digital transactions, I often find myself questioning the differences between a payment acquirer vs payment gateway. Understanding these two components is crucial for optimizing payment processing and ensuring a seamless experience for customers.
In this article, I’ll break down the key distinctions between payment acquirers and payment gateways, explaining their roles in transaction processing and how they work together to facilitate payments. Whether you’re setting up an online store or simply curious about the payment landscape, this guide will help clarify these essential concepts. Let’s dive in!
What is a Payment Acquirer?
The Payment Acquirer is the financial institution that facilitates the merchant’s account and receives payments on behalf of the merchant. It is primarily called an acquiring bank, and is directly involved in acceptance of the payment, as well as, the transfer of the funds.
Initially, the Payment Acquirer, establishes a contract with the merchant and then provides a merchant account. This acquiring bank is mainly involved in receiving deposits from the merchant and makes sure that funds are available for the merchant at his convenience.
Payment Acquirers, also known as acquiring banks, generally have a great relationship with renowned card companies like Mastercard and Visa. These acquirers enable merchants to accept payments and transfer funds from customers quite quickly and withdraw these funds at their will, whenever they require it.
Interestingly, every online payment requires a Payment Acquirer regardless of which payment processing method they might be using. However, as the primary entity that facilitates the transfer of funds and deposits, these acquirers must abide by certain laws, brand regulations, etc.
What is a Payment Gateway?
Payment Gateways are financial services provided by certain providers, that act as a mediator between customers and merchants. They are directly involved in facilitating transactions by reaching information between customer’s bank and merchant’s account, but is not directly involved in the transfer of the funds.
Basically, it creates a link between customers and merchants and allows them to see transaction information before the actual transaction can take place. Moreover, Payment Gateways are also responsible for customers receiving information about the acceptance and declination of their payment.
Most independent businesses starting out or have already created a base, choose different gateways as their primary payment option. It is the most convenient option for independent businesses who have already created their own website or gotten their own merchant account.
Additionally, the world-class customer data encryption process of Payment Gateways gives customers an added sense of reliability and security. Plus, Payment Gateways are also used by businesses and companies in order to avoid credit card fraud and protection of customer data. Businesses using Gateways can also customize the payment option pages based on how they fit to enhance the customer experience.
Check out the difference between Payment Aggregator and Payment Gateway.
Payment Acquirer vs Payment Gateway
Payment Gateways and Payment Acquirer are not mutually exclusive and can be mutually inclusive depending on the nature of the payment processing. Having said, there are numerous aspects in which these two are quite different from each other.
Firstly, Payment Acquirers are acquiring banks that are directly in the transfer of the funds, but Payment Gateways are not directly involved in the transfer of the funds. They just work as mediator between customer’s bank and the acquiring bank.
Moreover, all sorts of online transactions go through based on the approval of the Payment Acquirer, but Payment Gateways just forward information of approval or rejection. So, in terms of authorization, these two also play different roles.
Payment Gateways, as the name suggests, are gateways or intermediaries that connect the Payment Acquirer with the customer’s bank. After the authorization process is completed by the customers’ bank and the acquirer, the Payment Gateway reaches the information of approval or denial and depending on that, the transaction might or might not go through.
