Do You Need A Merchant Account and Payment Gateway Both Or One Is Enough?
There are some common misconceptions among merchants about what services are required to accept payments online. Businesses get confused about what merchant services they need to process transactions. Do companies require both i.e. merchant account and gateway provider to process the transactions? The answer to the question is yes. Both are necessary to process transactions and accept online payments. In fact, both merchant services serve totally different functions. All purchase of an online eCommerce store requires a merchant account and a payment gateway to process the transaction. The payment gateway helps to authorize the transaction and a merchant account is where the funds are placed for a while before settlement. Still confused, let’s dig deep and understand the basics of payment processing. Stay Connected!!!
Let’s Look At Merchant Account And Payment Gateway In A Detailed Way
Are you an eCommerce merchant? Then you may have heard about Merchant Accounts and Payment Gateways. They both are necessary to sell online and accept payments from customers. While searching for a merchant account and payment gateway provider, business owners sometimes get hung up between what these terms are. Well, let’s first understand the difference between the two to make it easier for you to choose one of the best merchant service provider.
- Payment Gateway: The online payment has never been so convenient. With the payment gateway, online shopping becomes so easy, and your customers are only a few steps away to purchase from your website. A payment gateway is an online merchant service that helps merchants to accept credit/debit card payments. The payment gateway is an online service that integrates with your eCommerce store and helps to authorize the transactions. A payment gateway is vital for both your retail shop and an online eCommerce store. In the retail store or brick and mortar shop, the payment gateway integrates with your POS System that helps you to accept payments either via card or mobile phones.
- Merchant Account: Have you ever thought where all the payments go after the customer pays the merchant for the product or service he purchased? Here comes the role of the merchant account. It is a type of account that helps merchants to accept credit/debit card payments. All the payments first go to the merchant account, and after the settlement period, the funds get transferred to the business bank account. Though it is a type of bank account, it serves different functions compared to that of a traditional bank account. A merchant has no control over the merchant account, means he can’t deposit funds or withdraw funds under his own will. It is just a holding account that withholds the payments for a temporary period, usually 2-3 days. The settlement time may vary from processor to processor.
Key Players Involved In Online Payment Processing
- Payment Processor: The payment processor is the one who makes payment processing easy. The payment processor is also known as an acquirer. It is an organization that provides payment processing service to businesses as per their requirement. It is the payment processor who offers merchant services like payment gateway or merchant account.
- Issuing Bank: An issuing bank or issuer, financial institution or banks who issue credit or debit cards to the consumers. The issuing bank is responsible for renewing the cards, upgrading the limit on credit cards, and even blocking the credit card if any suspicious activity notices or suspension request raised by the cardholder.
- Card Network: Credit card transaction has never been possible without the credit card network. A credit card network is a financial institution that provides effective communication between the merchant and the issuing banks. They facilitate the card transaction to take place.
We at Quadrapay are partnered with various international payment providers to help you to get all merchant services under one roof. Contact us or fill the pre-approval form so that we may let you get started.
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