In the wake of the global COVID-19 pandemic, the need for a strong online presence has never been clearer to merchants who have traditionally operated on a brick-and-mortar-only basis. But with the flood of new entrants to eCommerce comes a flood of questions as business owners struggle to navigate online sales. One question that comes up consistently is what the difference is between a payment processor and a payment gateway. In this article, we’ll explain the difference between the two, how each one works, and, most importantly, how they work together to ensure successful, secure online transactions.
Third-party processors, like PayPal, Square, and Stripe, are companies that provide payment processing to clients by pooling all client payments through their own master merchant accounts. For example, if you sign up with PayPal, you do not get your own merchant account. Instead, whenever you accept a credit card payment, that payment is processed through PayPal’s merchant account (along with every other transaction from every one of their members), and you are then paid out, in turn, by PayPal.
We are living in the digital age where it is possible for almost every aspect of our lives to happen on a virtual platform. The business sector also caught on, and there was mass movement from brick and motor to the virtual selling and buying of services and goods. Electronic networks, especially the internet, are slowly becoming the number one way to transmit money upon a transaction this is the e-commerce processing era. Increased online trading and e-commerce stores continue to experience tremendous growth due to technology advancing the ability to pay online.