A payment processor is a company or service that handles the transaction between a buyer and a seller in an online or physical commerce transaction. Payment processors enable merchants to accept electronic payments from customers, such as credit card transactions, electronic funds transfers, and mobile payments.

1. MERCHANTECH
PAYMENT PROCESSOR VS
PAYMENT GATEWAY: THE
BIGGEST DIFFERENCE

2. What is a Payment Processor?
A payment processor is a company or service that handles the
transaction between a buyer and a seller in an online or physical
commerce transaction. Payment processors enable merchants to
accept electronic payments from customers, such as credit card
transactions, electronic funds transfers, and mobile payments.
When a customer makes a purchase, the payment processor acts as
an intermediary between the customer’s bank or credit card
company and the merchant’s bank account. The payment processor
verifies the customer’s payment information and facilitates the
transfer of funds from the customer to the merchant.
In addition to processing payments, payment processors often
provide other services such as fraud detection, chargeback
management, and financial reporting. Examples of popular payment
processors include PayPal, Stripe, Square, and Braintree.

3. What is a Payment Gateway?
A payment gateway is a service that processes online transactions for
e-commerce websites and other online businesses. It acts as a
virtual point-of-sale terminal to securely authorize and process
credit card, debit card, and other electronic payments.
When a customer submits an online payment through a website or
mobile app, the payment gateway securely collects the payment
information, encrypts it, and sends it to the payment processor for
further processing. The payment gateway ensures that the
transaction is secure and complies with industry standards and
regulations.
In addition to processing payments, payment gateways often provide
additional services such as fraud detection, risk management,
recurring billing, and subscription management.
Some popular payment gateway providers include Authorize.net,
PayPal, Stripe, and Braintree. Payment gateway fees can vary,
depending on the provider, transaction volume, and other factors.

4. Types of Payment Processors
 Merchant Account Providers: These payment processors offer
merchants a dedicated merchant account to process payments.
They typically charge a percentage of the transaction amount and
a flat fee per transaction.
 Aggregators: These payment processors allow businesses to
accept payments without requiring a dedicated merchant account.
Instead, they aggregate transactions from multiple merchants and
process them through a single account. They typically charge a
higher percentage of the transaction amount but may not have a
flat fee.
 Direct Payment Processors: These payment processors allow
businesses to accept payments directly through their website or
mobile app. They typically charge a percentage of the transaction
amount and a flat fee per transaction.

5. Types of Payment Processors
 Mobile Payment Processors: These payment processors enable
businesses to accept payments through mobile devices, such as
smartphones and tablets. They may offer additional features such
as invoicing and online payments.
 International Payment Processors: These payment processors
specialize in processing payments across international borders,
enabling businesses to accept payments from customers around
the world. They typically offer multi-currency support and may
charge additional fees for currency conversion and cross-border
transactions.

6. Types of Payment Gateways:
 Hosted Payment Gateways: These payment gateways redirect
customers to a payment page hosted on the payment gateway’s
servers. Customers enter their payment information on this page,
and the payment gateway handles the transaction processing.
Examples of hosted payment gateways include PayPal Standard
and 2Checkout.
 Self-Hosted Payment Gateways: These payment gateways allow
businesses to host the payment page on their own website or
server. They typically require more technical knowledge to set up
and may be subject to more stringent security requirements.
Examples of self-hosted payment gateways include Authorize.net
and Braintree.
 API Payment Gateways: These payment gateways allow businesses
to integrate payment processing directly into their website or
mobile app using an API (Application Programming Interface). This
allows for a more seamless payment experience and greater
control over the payment process. Examples of API payment

7. Types of Payment Gateways:
 Mobile Payment Gateways: These payment gateways are designed
specifically for mobile devices, allowing businesses to accept
payments through mobile apps or mobile-optimized websites.
Examples of mobile payment gateways include Apple Pay and
Google Pay.
 Virtual Terminal Payment Gateways: These payment gateways
enable businesses to process payments manually, either by
entering payment information into a virtual terminal on a
computer or by using a card reader to process payments in
person. Examples of virtual terminal payment gateways include
Square and PayPal Here.

8. What is the difference between
Gateway and Processor?
 A payment gateway is a service that securely transmits payment
information from a merchant’s website or mobile app to a
payment processor for further processing. It essentially acts as a
virtual point-of-sale terminal that authorizes and processes
electronic payments.
 A payment processor, on the other hand, is a service that manages
the transaction between the customer’s bank or credit card
company and the merchant’s bank account. It validates the
payment information, verifies that the customer has sufficient
funds, and then transfers the funds to the merchant’s account.

9. What is the difference between
Gateway and Processor?
 In other words, the payment gateway is responsible for securely
transmitting payment information from the customer to the
payment processor, while the payment processor is responsible
for managing the financial transaction and ensuring that the funds
are transferred to the merchant’s account.
 Overall, the payment gateway and payment processor work
together to facilitate electronic payments and enable businesses
to accept payments from customers in a secure and efficient
manner.

10. What is the difference between
Gateway and Processor?
 In other words, the payment gateway is responsible for securely
transmitting payment information from the customer to the
payment processor, while the payment processor is responsible
for managing the financial transaction and ensuring that the funds
are transferred to the merchant’s account.
 Overall, the payment gateway and payment processor work
together to facilitate electronic payments and enable businesses
to accept payments from customers in a secure and efficient
manner.

11. Payment processors and payment
getaways : When to use which?
In most cases, businesses will need to use both a payment processor
and a payment gateway to accept electronic payments from
customers. However, the specific payment processor and payment
gateway that a business chooses will depend on several factors, such
as the type of business, transaction volume, and security
requirements.
 Merchant Account: If a business already has a dedicated merchant
account with a payment processor, it may be able to use a self-
hosted payment gateway to process payments directly on its
website or mobile app. This allows for more control over the
payment process and can result in lower transaction fees.
 Aggregated Transactions: If a business is just starting and doesn’t
have a dedicated merchant account, it may be easier and more
cost-effective to use a hosted payment gateway that aggregates

12. Payment processors and payment
getaways : When to use which?
 Security: Businesses that require a high level of security may opt
for a payment gateway that offers additional security features,
such as tokenization, fraud detection, and PCI compliance.
 Multi-Currency Support: If a business operates in multiple
countries and accepts payments in multiple currencies, it may
need to use an international payment gateway that supports
multiple currencies and cross-border transactions.
 Mobile Payments: Businesses that accept payments through
mobile devices may need to use a mobile payment gateway that is
optimized for mobile payments and provides a seamless payment
experience for customers.

13. Thank You
Visit us: https://merchantech.com/
Email: csr@merchantech.com
Phone no: 1-800-276-3724
Address: 230 S. Sterling Drive #260 Mountain House, CA
95391