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Difference
between payment gateways and merchant
accounts
If a person decides on opening an
online store, it is mandatory from
him/her to be familiar with payment
gateways and merchant accounts. For
receiving payment made by online
transactions, a trader will need to
possess some kind of merchant account.
Though banks provide merchant accounts,
one needs to be prepared to shell out
considerable amount of money. If this is
something that a trader wants to avoid,
then one can look for the popular
ecommerce accounts that are available
online. With the growing popularity of
ecommerce business, it is pretty easy
these days to acquire a merchant
account.
A payment gateways works as a
go-between for the financial
institutions and trader’s shopping cart.
The payment gateways are invisible to
shoppers and are known to handle the
transactions between merchant accounts
and the financial institution of a
consumer. This happens when a consumer
clicks on the “buy” button.
There also exist third party card
processors like PayPal. These processors
higher amounts for each transaction but
no monthly charges are taken. Third
party credit card processors are the
best option for starters and small
business owners since most of the
traders have PayPal accounts. Once a
trader has established his business,
he/she may need to get into payment
gateways and merchant accounts to save
funds.
All the transactions by default go
through payment gateways. These gateways
are known to provide data back and forth
the sellers and buyer’s financial
network. Once this has been done, the
fund from a seller’s account is
transferred to the merchant account.
It is very important to checks the
deference in charges and rates before a
merchant account and a payment gateway
is chosen. It is always better not to
select the first company which a trader
comes across right away. It is best to
do some investigations else a trader may
quickly end up losing his money. The
rates and services for both the merchant
accounts and payment gateways need to be
checked well in advance. The ultimate
goal is to get more number of services
at reasonable prices. However, this does
not imply that one should select the
cheapest prices. A person usually gets
what he/she pays for; this holds true
for ecommerce also.
It is necessary to ensure that no
hidden prices are involved with any kind
of payment gateway or merchant account.
If all the charges that will be incurred
are not shown, it is always advisable
not to opt for such services. There are
a few reputable services as well as
non-reputable ones; hence a trader
should know what he/she is getting.
A merchant account works in support
of a seller but payment gateways serve
as data ports for the financial networks
in a transaction. This will include both
the seller as well as the buyer. Without
merchant accounts, sellers cannot
receive funds made by online
transactions. Without payment gateways,
a transaction just cannot take place.
This is the primary difference between
payment gateways and merchant accounts.
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