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SOME FACTS ABOUT PAYMENT GATEWAYS,
ECOMMERCE AND MERCHANT ACCOUNTS
Every article about
internet venture contains phrases such
as “payment gateway” and “e – commerce
payment processing”. If you are a new
comer in the field then you should
become a little knowledgeable about how
a merchant account is different from a
payment gateway which is sometimes
referred to as “e – commerce” payment
processor.
This article will help
you in understanding how payment
processing works and its costs and other
options which will help you.
Here are some basic
definitions:
Merchant Account
It is a particular type
of account in a bank which is provided
by the bank or any other financial
institution. The account will have a
contract with it.
The primary use or
function of the merchant account is that
it allows the account holder to accept
payments through credit card from their
customers. For this the credit card
should be approved before each
transaction and this product has a
number of fees and also terms associated
with it.
The merchant account not
only allows you accept credit cards but,
depending on the service provider and
the services that you have opted for,
you can also accept e – check’s and
debit cards.
If your business is
online then you need a payment gateway
together with a merchant account to
perform the same functions. You will
also get a shopping cart which can be
used by your customers to purchase and
pay for the product that is selected by
them.
The primary benefit that
you get from the merchant account, for
your online business is, your business
will be automated and customers will be
able to shop at any time. For offline
businesses that have physical stores the
merchant accounts will increase your
sales because the customer tends to buy
more, when he can pay using his credit
card.
Payment Gateway
It is a direct link
between your bank and the shopping cart,
for processing of payments by the bank.
This is done on the internet, in “real
time” and needs authorization,
management and processing for every
transaction.
The difference must be
very clear now. The merchant account is
like a license which permits you to
accept credit card payments and the
payment gateway is a medium of receiving
online payments through credit cards,
debit cards and other options.
One important fact to
point out is: having only the payment
gateway will not allow you to accept
credit card payments. A merchant account
is required before you can accept credit
cards for your business. Due to this
reason, most of the merchant account
providers also provide payment gateways
and services related to them. An example
would be authorize.net.
When you set up your
business the marketing agencies of the
account providing companies will come to
you to sell their products. If you
accept the offer, then you will not be
charged for set up fees which would
otherwise be there. Therefore, don’t
just send these agents away thinking
that they are wasting your time or
trying to sell you sub – standard
products. |
