Virtually every business, from a local retailer to Amazon, accepts digital payments from customers. With the fast-paced, complex e-commerce industry getting wings over the last few years, it’s imperative to use online payment processors to reach global customers. Business owners who already accept digital payments on their website or app must be aware of merchant accounts. However, newbies in the eCommerce segment must be struggling to learn the differences between online payment gateways and merchant accounts.
eCommerce owners often confuse a merchant account with a payment gateway. However, they are not the same. To accept digital payments, a merchant needs both to solve their distinct purposes. Let’s know the differences between merchant accounts and payment gateways high risk merchant services.
Working on a Merchant Account and Payment Gateway
Merchant Account: A merchant account is a digital space that collects and stores the incoming funds. It contains business information, and only the merchant and authorized entities can access and manage it. Once payment is cleared, the merchant account funds get transferred to the seller’s bank account.
Payment Gateway: An online payment gateway connects the customer’s bank and the seller’s bank account. When a buyer sends a digital payment, the payer’s bank account money reaches the seller’s merchant account through a payment gateway.
While a merchant account is unique to an eCommerce business, several businesses and their customers commonly use a gateway to carry out transactions. The job of a gateway is to ensure that the funds travel from the payer’s to the receiver’s account safely without any third-party access.
Types of Online Payment Gateways and Merchant Accounts
Merchant Account: Merchant accounts can be PSPs (Payment Service Providers) and ISOs (Independent Sales Organisations). PSPs are appropriate for small and medium-sized merchants because of their easy setup and low maintenance needs. ISOs are best for large-size businesses as they are all-inclusive and can handle high transaction volumes.
Top Payment Gateway: eCommerce business owners may choose a classic or a modern gateway. A classic gateway requires the seller to configure its bank and merchant account. On the other hand, a modern gateway is an all-inclusive online payment processor a seller can set up in minutes without any merchant account.
Although the setup and management of a classic gateway are complex, it is ideal for serious eCommerce businesses looking to give an optimum experience to the customers. Buyers do not need to leave the website to pay, and they can complete the transactions within seconds.
Benefits to the Seller
Merchant Account: A merchant account enables an eCommerce business to accept digital payments through an online payment processor. Setting it up can help a seller boost sales, improve cash flow, and gain a competitive edge in the market.
Top Payment Gateway: An eCommerce business can use a payment gateway to offer a smooth buying experience to customers. It features integrated payments with CRM, ERP, and accounting software or physical card transactions at a POS system. A business can start accepting contactless payments using a payment gateway by tapping or waving a card over the NFC device.
Essential Features
Merchant Account: While looking for a merchant account, opt for a provider that allows payment settlements in multiple currencies. It must give on-demand access to the account information without any hidden charges. A business handling high-volume transactions must look for a merchant account without processing amount or volume restrictions.
Top Payment Gateway: Security is one of the essential features to look for in online payment gateways. Prefer a fully PCI Level 1 compliant gateway that has SSL certification. Besides that, it should be compatible with multiple currencies, especially if the business has an international customer base. Anti-fraud tools are also of the essence.
Finding the Right Merchant Accounts and Online Payment Gateways
While looking for a merchant account or payment gateway, compatibility is the most crucial factor to consider. Consider the banks, merchant accounts, payment methods, and industries the gateway restricts or supports. Work with a reputable online payment processor offering both payment gateway and merchant account services. It must bundle high-end payment processing services with low-cost hosting, streamlined compatibility, and seamless service. The setup process must be easy, affordable, and secure.
With the right payment processor, an eCommerce business will run smoothly, and the customers will thank them.
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