Payment Gateway vs Payment Processor

What’s the difference between payment gateway vs payment processor? Every payment processor requires a payment gateway, but not every payment gateway includes a payment processor. If you want to accept credit card payments on behalf of your business, you’ll need both of these important items, one of which allows you to accept payments securely and the other of which allows you to manage those transactions.

What Is the Difference Between a Payment Gateway and Payment Processor?

Payment Gateway: A payment gateway is the virtual tunnel through which a transaction must travel. When a customer makes a payment on your website, it must pass through the gateway in order to reach your merchant services account. It’s the invisible link between you and your customer when a payment is submitted. A quality payment gateway is encrypted to prevent third-party interception and ensure that each payment goes to its intended destination.

Payment Processor: Your payment processor is the service that processes and manages all of the online payments you receive. Whereas the payment gateway is only concerned with the sender and receiver in a given transaction, the payment processor stores and tracks all of your payments and allows you to transmit that money into your own personal or business bank account. The processor is concerned with your customers, the acquiring bank, the issuing bank, and the payment gateway. Your money is typically managed via a proprietary software solution.

What to Look For in a Payment Gateway vs Payment Processor

Payment Gateway: When it comes to payment gateways, the most important thing is security. First, always ensure that the gateway is PCI compliant. If your business manages a high volume of monthly transactions, ensure that the gateway is Level 1 compliant, as such gateways are equipped to manage millions of transactions per month. Your gateway should also be protected with SSL encryption to prevent third-party infiltration. QPay Europe uses the SHA-256 SSL encryption standard to ensure the maximum security for merchants. Finally, if you cater to an international audience, make sure that your payment gateway is able to accommodate a wide range of currencies.

Payment Processor: When choosing a payment processor, you’ll want to go with a respected, reputable company that offers a full suite of merchant services, including chargeback and fraud prevention tools, digital wallet services, and a convenient dashboard from which you can view incoming and past transactions in an easily digestible format. It’s also important to choose a company that offers excellent customer support.

Do I Need Both a Payment Gateway and a Payment Processor?

Most merchants will need both a payment gateway and a payment processor. The only major exception is if you accept debit and credit card payments exclusively at an in-person point-of-sale terminal. In these cases, your point-of-sale provider should have its own gateway through which incoming payments are transmitted.

If you operate in the ecommerce space and need to accept credit and debit card payments online, you’ll want to invest in your own payment gateway services. It’s the most affordable and reputable way to go. While you technically could use a payment aggregator like PayPal, this is not recommended for serious businesses. Not only are payment aggregators more inconvenient for customers, but:

  • It can reflect negatively on your business if your website is unable to natively accept credit card payments.
  • When you process high volumes, payment aggregators tend to be much more expensive. They typically offer fixed rates, which means you’re ineligible for discounts as your volume increases. With your own gateway, you can usually secure lower rates for high volumes.
  • Payment aggregators are extremely risk-averse, meaning that they’re much more likely to freeze or place a hold on your account if they suspect any suspicious activity. This can be very costly and frustrating for businesses.

For the sake of your business, always opt for both a payment gateway and a payment processor.

The Pros & Cons of Choosing a Combined Processor and Gateway

Some merchant services providers offer a secure payment gateway combined with full-service payment processing. But is it a good idea?

Pros: The main benefit is the convenience. You don’t have to shop around for multiple service providers, you don’t have to complete any complicated configurations, and you never have to worry about compatibility. Everything is streamlined. In addition, you can often save money by bundling these services.

Cons: Some merchant services providers will require you to use their gateway. So if you already have a gateway that you’re happy with, you may be out of luck. And you never want to get stuck with a gateway that doesn’t offer all of the currencies or payment options you need. If you do decide to bundle, just make sure that the service includes everything you require.

If you’re seeking a payment processor that offers everything you need to accept and manage credit card payments, we invite you to check out QPay Europe. Our payment processing services are fully equipped, and our global payment gateway is trusted by hundreds of leading businesses throughout the UK and Europe.

  • Accept over 150 forms of currency and a range of alternative payments
  • Accommodate customers in most countries throughout the world
  • Enjoy PCI Level 1 security and SHA-256 encryption for every transaction
  • Minimise fraud and chargebacks with industry-leading Fraud Scrub technology
  • Receive your profits in any of 25 different currencies

We accept 98% of merchants, and we can get you up and running in as little as 12 hours. Sign up today on our website to learn more, and decide if QPay Europe is right for your business.

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