As I navigate the world of online transactions, I often find myself exploring the terms payment gateway vs payment processor. Understanding the difference between these two components is crucial for anyone looking to optimize their payment systems effectively.
In this article, I’ll break down the unique roles of payment gateways and payment processors, shedding light on how they work together to facilitate transactions. Whether you’re a business owner setting up an online store or simply curious about payment technology, this guide will provide valuable insights into these essential tools. Let’s dive into the details!
What is a Payment Gateway?
Firstly, Payment Gateway is a method that is being used by merchants to receive debit card and credit card payments from their consumers. This payment method consists of both physical card-reading devices and online payment processing methods.
The Payment Gateway ensures funds are available to the merchants, using which they can eventually get paid. Moreover, payment options include mobile wallet, net banking, debit cards, credit cards, etc.
The importance of Payment Gateway in terms of offering easy-payment option while maintaining top-notch security can’t be fully expressed in words. An online business can not survive without establishing a secure payment process that enables their customers to pay without any hesitation regarding the validity of their payments.
Furthermore, its worldwide payment acceptance helps businesses grow a much wider customer base. Additionally, quick merchant onboarding provided by a Payment Gateway enables merchants to set up and expand their businesses and at a much faster rate.
Check out the difference between Payment Facilitator and Payment Gateway.
What is a Payment Processor?
On the other hand, Payment Processor refers to companies that keep track and manage credit card transactions. Which basically means, it works as a mediator between the merchants and the banks, while reaching card transactions information to both the merchants and the customers.
Additionally, processors offer customer service, card acceptance services and security measures. Transactions go through, only if adequate funds required for the purchase are available.
Payment Processors enable merchants to provide a variety of payment options to their customers that are very easy to use. Moreover, the significance of Payment Processors goes beyond just customer experience and satisfaction, it ensures security of payments through transaction information that is sent to both merchants and customers.
Additionally, it is a must for businesses and companies that want to establish an array of payment options for their consumers. The services offered by Payment Processors enable companies to reduce cost and accelerate time-to-market, while also enhancing the quality of transactions.
Payment Gateway vs Payment Processor
The primary difference is that a Payment Processor maintains transactions, while a Payment Gateway is a technology through which approval or declination of transactions among merchants and consumers is done.
Moreover, Payment Gateways record and send credit card data to Payment Processors, while communicating approvals or declinations to merchants and consumers. Additionally, Payment Processors operate behind closed doors to ensure secure routing data between different parties involved, till the adjustment of funds in their bank accounts.
Furthermore, the Payment Gateway initiates the start of the transaction and also ends it, while information regarding the approval or rejection of the customers’ transaction is reached to them. On the other hand, the Payment Processor proceeds information among customers’ banks and the merchant’s bank.
Every transaction facilitated online using one of these tools requires the other. So, despite the fact that they operate quite differently from each other and have different roles in payment solutions, they also have a strong correlation with each other.
