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Payment Gateway vs. Payment Processor

Payment gateways and payment processor are two key links in the payment processing chain. As a business owner, you’ve probably heard these terms and wondered what the difference is.

We’re here to help.

Let’s start here: There are four parties involved with every credit card transaction:

  • The merchant;
  • The customer;
  • The acquiring bank that provides the merchant’s processing services;
  • The issuing bank that issued the customer’s credit card or debit card

The role of payment processors and payments gateways differ, yet each is a vital component in accepting payment online.

What Is a Payment Processor?

To accept credit cards at your business, you’ll set up an account with a merchant service provider like BluePay. The payment processor executes the transaction by transmitting data between you, the merchant; the issuing bank (i.e., the bank that issued your customer's credit card); and the acquiring bank (i.e., your bank). A payment processor also typically provides the credit card machines and other equipment you use to accept credit card payments.

So What Is a Payment Gateway?

A payment gateway securely authorizes payments for e-commerce websites. Think of it as an online point-of-sale terminal for your business. When you sign up for a merchant account, your provider may or may not offer a payment gateway.

Since BluePay is an all-in-one provider, we have our own payment gateway that is available to our merchant account holders. The BluePay gateway can be used in a retail environment with a swipe reader.  It's integrated into several POS systems and can process PIN debit transactions. Using a payment gateway to securely process integrated payments can reduce errors, speed up transaction processing, and ease reconciliation. 

If you don't want to invest in terminals, or if you don't have an ecommerce website, you can use the BluePay gateway’s Virtual Terminal to process transactions as long as you have an Internet connection.

Payment Processor vs. Payment Gateway: Which Do I Need?

The most common use of a gateway is an ecommerce store on the internet.  If you’re not an e-commerce business, you may not need a payment gateway. A basic merchant account may be best; look for a merchant account that has reasonable payment processing rates, 24/7 customer service, and PCI-compliant processing.

On the other hand, a payment gateway is probably in your future if you’re an e-commerce site. Not all merchant account providers have a payment gateway. Some providers use a third-party payment gateway, which can be a hassle when you have a dispute. Who should you contact when you have a problem?

BluePay makes it simple: A merchant account and a payment gateway from a single provider.


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