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What is the difference between Merchant Account and Payment Gateway?

Siddharth_SSiddharth_S subscriber Posts: 2 Member
How are merchant services different from a payment gateway? How do they enable running a business?


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    Ryan O'BlenessRyan O'Bleness administrator Posts: 1,137 Site Admin

    I believe payment gateways are used for facilitating online transactions and helping them get approved and flowing through the payment funnel. Merchant accounts are for collecting the funds sent to the merchant on successful sales and are paid out to the merchant. 

    I am certainly not an expert on this, but this article from 2016 seems to explain it well. 


    If you're interested in merchant services, definitely check out our partner, International Bancard: https://startupnation.com/internationalbancard/

    Ryan O'Bleness
    Community Manager
    StartupNation, LLC
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    Chris262Chris262 subscriber Posts: 10 Bronze Level Member
    With a payment gateway, the online transaction occurs through a secure hosted payment form on your website or through an integrated shopping cart. Once the customer submits his or her order, the encrypted payment goes to the payment gateway, then to the payment processor, and through the credit card network and to the customer’s credit card issuer for authorization, popular payment gateways are stripe, g2a pay etc
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    MeCkoMeCko subscriber Posts: 11 Bronze Level Member
    Hello there.

    A merchant account is an agreement between a merchant and an acquiring bank that allows the former receive and process credit card payments. Getting a merchant account is essential for all those willing to reach out to a broader audience. More and more people are willing to pay for goods and services not with cash but with credit cards – and that’s why a merchant account is a must!
    When you have a merchant account - you need to choose a payment provider. It is a company that provides money processing within a merchant, cardholder, acquiring a bank, a payment gateway, and an issuing bank.
    To provide such solutions payment providers use special software, called payment gateway. This software serves as an interface between the payment form on your website and an acquiring bank
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    Maurice GMaurice G subscriber Posts: 2 Member
    The payment processor is the company providing you the merchant account and therefore handles the underwriting and risk management of your payment processing. The merchant account is where all the critical elements such as pricing (although payment gateways have fees too), funding, chargebacks, etc. will be handled. Some examples are First Data, Vantiv, and Heartland. 

    The payment gateway is really just the connection/link between your website and payment processor (merchant account) so that you get funded. If your sales are done over the phone, then you would use the gateways virtual terminal to manually enter in the card info. Some examples are Authorize. Net, USA ePay and NMI. However, some payment processors have their own gateways such as Stripe (they’re both the processor and gateway technically).

    A payment gateway is not always required for accepting debit and credit cards like if you are using a basic standalone terminal such as a VeriFone or Ingenico.
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    emmamegan0190emmamegan0190 subscriber Posts: 6 Member
    Mobile payment processing technology can actually be more secure and convenient. Also, its applications are for businesses of every size and type.

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    IrenRetIrenRet subscriber Posts: 0 Member

    Payment gateway is just a software that makes online payments possible. Payment providers are companies that provide such software.

    Merchant account is a special trading account that is used to store funds untill they move to your personal bank account. All transactions must be monitored and merchant accounts serve as a border between personal bank account and a customers' money.

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