Payment gateway vs. payment processor: What’s the difference?
“Payment Gateway” and “Payment Processor”? Sounds like tech jargon, right? So, what’s the difference between a payment processor and a payment gateway, and which does your business need?
What Is a Payment Gateway?
A Payment Gateway is a technology that authenticates and transfers transaction information from a merchant to the acquiring bank or a payment processor for an online transaction. It ensures that sensitive data, like credit card numbers, are securely transmitted and encrypted. For businesses that operate on a global scale, a payment gateway with global payment acceptance lets you cater to international customers without the need to integrate and manage multiple payment solutions.
What Is a Payment Processor?
A Payment Processor is a company that manages the transaction process, which involves communicating transaction details between merchants, card issuers, and acquirers. They ensure that the transaction is valid, the funds are available and then facilitate the transfer of funds from the customer’s account to the merchant’s account.
What Is the Difference?
While both payment gateways and payment processors play crucial roles in the payment ecosystem, they serve different purposes:
- Functionality: A payment gateway authorizes the payment and ensures that the data is safe and secure. A payment processor, meanwhile, handles the actual movement of funds between accounts.
- Security: Payment gateways focus on encrypting sensitive data to ensure that information is passed securely between the customer and the merchant, and also between the merchant and the processor. Payment processors, however, ensure that the transaction itself is legitimate.
- Integration: Payment gateways can be integrated with various online shopping carts and platforms, while payment processors often require more specific integrations.
Which one do I need?
The answer largely depends on the nature of your business:
- Online Businesses: If you’re running an ecommerce platform, you’ll likely need both. The payment gateway will secure and transmit the payment details, while the processor will handle the transaction. Many payment processors provide their own payment gateway or give merchants access to gateways via partnerships, providing a seamless and integrated solution.
- Physical Stores: Brick-and-mortar stores might only need a payment processor, especially if they’re not dealing with online transactions.
- Hybrid Businesses: For businesses that operate both online and offline, a combination of both is essential.
Seamless Payment Experiences
Whether you’re a budding ecommerce platform or a global enterprise, ensuring that you have the right payment infrastructure in place is key to your success.
Not all solutions are created equal. It’s essential to find a provider that offers secure and reliable payment solutions that meet your needs.
Rapyd Is Your Global Payments Problem Solver
Rapyd Collect offers a comprehensive suite of payment solutions that grow sales by letting you easily accept cards and local payment methods globally.
With Rapyd, you can accept debit and credit cards and hundreds of payment types, including cash, ewallets and local payment methods. Rapyd Collect gives your business the tools to accept payments how, when and where opportunity takes you.
- Localize checkout with customers preferred currencies, languages and payment methods
- Integrate via API, Hosted Checkout, Toolkit or Plugins
- Generate Payment Links for one-time or repeat use
- Use a virtual terminal to accept payments in-person or over the phone
Let Rapyd help you get the right fit and drive more sales for your business online.