Most business owners have heard the terms patient processor and patient gateway, but not all of them know that, while these two terms sound similar, they refer to different parts of the payment processing chain. What both of them have in common is that they're vital to accepting credit card payments. This article will explore the differences.
What Are Payment Processors?
Payment processors execute credit card transactions by transmitting data between merchants, the banks that issue customers' credit cards (issuing banks), and the merchants' banks (acquiring banks). For in-person transactions, payment processors often provide equipment such as credit card readers to facilitate the acceptance of this form of payment. Merchants simply set up accounts with service providers like BlueSnap and let the payment processors do all of the hard work.
What Are Payment Gateways?
Payment gateways are tools that transmit online payment data to processors securely. They also authorize payments for card-not-present (CNP) transactions on eCommerce sites. ECommerce business owners can think of payment gateways as the online equivalent of point-of-sale terminals.
Online vs. In-Person Transactions
For in-person transactions, multiple payment processors may be able to handle all of the aspects of accepting credit card payments. They do all of the relaying of transaction details to and from merchants, issuing banks, and acquiring banks, and may even send the equipment necessary to accept credit card payments in person.
For online transactions, payment gateways are essential tools to bridge the gap between the entry of payment details and payment processors. They encrypt and transmit the details, then communicate a payment processor's approval or decline of the card back to merchants or customers. Payment gateways are crucial to online transactions, but they're used much less frequently with credit card readers and point-of-sale systems.
Choosing the Right Option
Most traditional, brick-and-mortar businesses that have been around for a while already have established relationships with payment processors and only use payment gateways if they also curate online stores. All eCommerce businesses use payment gateways to accept payments for goods and services. However, there's a little more ambiguity than one might think.
Payment gateway technology has been expanding in recent years, but as ever, new technology can sometimes fail, making it imperative to find a reliable credit card processor in Europe (or elsewhere) that can handle all of your online transactions. Now, some forward-thinking business owners are using this tool to facilitate payment acceptance across all sales channels and devices, including POS transactions. In this circumstance, the gateway can be used to integrate payments into CRM or accounting software in addition to processing transactions on mobile devices and point-of-sale systems.
Selecting a Provider
Entrepreneurs or established business owners looking to make a change may want to investigate payment processors that also offer dedicated payment gateways or have established relationships with specific companies that do. It's the best way to ensure the secure processing of integrated payments, reduce errors, speed up processing times, and ease reconciliation. This is also the right approach to take when using virtual terminals to process in-person transactions and for business owners who plan to accept international payments.
Reach Out to Learn More
Taking the step of setting up a merchant account, choosing a payment processor, and deciding which payment gateway to use for online and virtual terminal transactions, can be tough. Merchants may want to find providers with good reputations in their fields and then reach out for more details about how the specific systems work. It's the best way to get answers to questions about the underlying processes behind credit card transactions.