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Payment Gateway vs. Payment Processor: What’s the Difference?

Do you know the difference between Payment Gateways and Payment Processors? If not, don’t worry – you’re not alone. Many people use the terms interchangeably, but they are, in fact, very different. A Payment Gateway is a secure system that allows businesses to accept customer payments via credit card and other major payment methods. A Payment Processor is the party responsible for sending transaction details to and from the customer’s card-issuing bank and the merchant’s acquiring bank. A third-party Payment Processor, like Seamless Chex, uses its proprietary Payment Gateway to process merchants’ eCommerce transactions. In this blog post, we will discuss the main differences between Payment Gateways and Payment Processors in more detail.

Payment Gateway vs. Payment Processor: Defined

Payment Gateway:

  • A Payment Gateway is a secure system that allows businesses to accept customer payments via credit cards and other payment methods.
  • Payment Gateways are commonly used for eCommerce transactions but can also accept payments with a credit card reader, POS system, or software integration.
  • Payment Gateways encrypt sensitive information, keeping your clients and transactions safe.
  • Payment Gateways are typically provided by a third-party Payment Processor or payment service provider.

Payment Processor:

  • A third-party processor is responsible for sending transaction details to and from the customer’s card-issuing bank and the merchant’s acquiring bank. Third-party Payment Processors provide payment processing services to businesses on behalf of banks or other financial institutions.
  • Payment Processors typically provide Payment Gateway services, but this is not always the case.
  • Payment Processors typically charge a fee for their services, generally a percentage of the total transaction amount.
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Payment Gateway vs. Payment Processor: What’s Right for Your Business

The Payment Gateway or Payment Processor you use will likely depend on your business needs and the merchant account provider you choose. Payment Gateways and Payment Processors are critical components for all businesses accepting credit card payments. However, these two terms are not interchangeable. Ideally, your business would obtain a merchant account from a third-party processor that offers Payment Gateway & Processing services. But not all merchant account providers have integrated Payment Gateways. Consequently, finding a third-party processor who can marry these two tools and enable successful business is essential.

Choosing the Right Third-Party Processor and Payment Gateway

Choosing a Payment Gateway and Payment Processor that’s right for you & your business is a vital first step toward scalability and success. A company like Seamless Chex is a Payment Gateway and Processor – meaning they take on both roles, ensuring all processing needs are met. Seamless Chex securely processes all major payment methods:

  • ACH payments
  • Credit Card/Debit Card payments
  • eCheck payments

We are here to help your business run smoothly and efficiently. Contact us today to learn more about how Seamless Chex can support your business’s success.

Right payment solution for you infographic

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