Payment Gateway

The role of Payment Gateways

Have you ever tried to know what the term ‘payment gateway’ really means?

Well this is what I found out about payment gateway. It might just be interesting to you especially if you or someone you know runs an online business.

What is a payment gateway? Simply put, a payment gateway is the direct link between the shopping cart and the bank that processes the payment. So when you buy something online and you enter your credit card number and complete the order, the online gateway is what connects the order cart with the bank that will make the payment to the merchant on your behalf.

The whole process takes place entirely online, in real time and the processes involved include authorization, processing and management of all online transactions. Once the payment has been authorized, access to their gateway graphical user interface is needed by the organization in order to complete the transaction.

If you run an online business and you want to set up a merchant account, you will need to get a payment gateway. This provides you with a shopping cart system that your customers can use to buy and pay for whatever product they select. Merchant accounts provide you with the ability to easily automate your business so you will be able to have money put in your account on the Internet every minute of the day.

The major difference therefore, between a merchant account and a payment gateway is that the merchant account gives you the license that will allow you to take payment by credit cards, and a payment gateway is the medium through which the receiving of online payments takes place, including credit and debit cards.

So if you have access to a payment gateway, it does not give you the license to take credit or debit cards. You will need a merchant account to be able to do that. It is interesting to note, that some of these merchant providers do also provide payment gateway services.

At lot of times what will happen when you are establishing your business, is that you will be presented with the option of opening payment gateway or some other services that will allow you to receive credit and debit card payments. Now if you accept the offer, chances are there will be no set up charges, so it will all be free for you. This is not the case if you had applied for a merchant account. When compared to a regular merchant account, these may be much more beneficial especially if your sales volume is low.

Keep in mind that the payment gateway and the merchant account are certainly necessary step if you wish to establish your online business, and have total automation. Without them you are likely giving up a lot of potential sales so you should consider setting up your own merchant account with a payment gateway.