Key Difference Between Payment Gateway Vs Payment Processor

Monday, July 25th, 2022

You can’t do without a payment processor and a payment gateway if you want to process transactions online. What’s the main difference between these two payment services? This article compares payment gateway vs payment processor.

Payment Gateway vs Payment Processor

Think of a payment gateway as the virtual point-of-sale (POS) terminal or the credit card reader at the cashier. This payment solution serves as the interface for collecting and transferring payment information from a customer to a merchant acquirer. The latter is also called an acquiring bank. Then, it communicates whether the customer has declined or accepted the payment.

As a rule, payment gateways are used for eCommerce transactions. However, they can also be used for credit card readers, POS systems, or software integration payments. Payment gateway providers often help merchants easily integrate their solutions into an eCommerce platform. Also, they may provide an API for custom integrations.

What about a payment processor? This company is responsible for transmitting the information gathered by a payment gateway between the acquiring bank and your customer’s bank. In addition, merchants can also get physical equipment for accepting card-based transactions from payment processors. 

The main difference between a payment gateway and a processor is that the former captures and transfers credit card data to the payment processor. Moreover, they send information regarding approvals or rejections regarding transactions. So, a payment processor works in the background securely routing data among all the parties involved, and is responsible for fund settlement in your bank account.

To find the right merchant-processing services for your eCommerce business, work with a reliable and experienced comparison specialist like BestPaymentProviders.co.uk. Best Payment Providers UK can help you with the payment gateway vs payment processor comparison so you can come up with the best deal for your online transactions. Best Payment Providers UK is focused on terms, integration, and complaints to provide the most honest snapshot of merchant-service providers in the country.  

Comparing a Payment Gateway with a Payment Processor

Payment gateways collect and secure customer data so that transactions can be approved or rejected. Payment processors transmit this data between your customer’s bank and the merchant acquirer.