There are several benefits of using a payment gateway. First of all, it benefits both the merchant and the customer. This is because the majority of the transaction occurs in the background. Each step can happen in as little as 3 seconds. Then, the transaction is sent to the merchant’s bank or other financial institution. Secondly, it is a lot easier to monitor and process. This is why fraud screening tools are beneficial.
Payment gateways
When you think of payment processing systems, you probably think of three entities: the payment gateway, the credit card processor, and the payment service provider. The payment gateway is responsible for gathering customer information, sending it to the payment processor, and communicating approvals and rejections to the merchant. Payment processors are responsible for routing data from the cardholder through the processing process to settle.
A payment gateway is a technology platform for online, accepting credit and debit cards. In addition, Brick-and-mortar stores have begun accepting mobile applications and QR codes. Payment gateways are consumer-facing interfaces that process payments through mobile devices. They also make in-store purchases easier by taking tapped transactions.
Payment processors
If you’re considering accepting credit card payments online, you’ve probably heard about payment gateways and processing. Both are required to process transactions. Payment gateways capture credit card details and pass them to the payment processor, who then transmits them back and forth to the merchant and the customer. Payment processors work behind the scenes to route data between the merchant and the customer through settlement.
A payment processor, on the other hand, helps online merchants accept payments by storing funds, disbursing them, and meeting compliance standards. In general, payment processors are financial platforms that provide payment processing services to online sellers. They work by entering into partnerships with other firms to transfer payments and information. In addition, these payment processors facilitate instantaneous transactions for end users. Therefore, a payment gateway that offers both services is the best choice for your business.
Merchant accounts
Many online merchants use payment gateways and merchant accounts to accept credit cards. This process is not as complex as it sounds. Merchant accounts are set up with a bank to accept credit card payments. This method does require the creation of a website and monthly maintenance fees. However, the benefits of a merchant account are various, including higher flexibility and ease of use.
The best way to determine whether or not you should use a payment gateway or a merchant account is to compare the features and costs of both services. Payment gateways are generally more expensive than merchant accounts and offer fewer features. Merchants may not need to comply with PCI requirements, integrate expensive POS systems, or perform payment reconciliation. However, if your business accepts various payment methods, using a payment gateway will simplify the process of getting paid.
Fraud screening tools
A payment gateway’s fraud screening tools use data from thousands of sources to predict and block fraudulent transactions. They use machine learning and algorithms to analyze these data points and determine whether to accept or decline a transaction. Often referred to as fraud scoring tools, they are a software layer between the checkout process and the gateway. With these tools, businesses can prevent the gateway from charging fees for fraudulent transactions. Fraud screening tools can be used on non-financial transactions, as well.
While some companies are better suited for large businesses, small businesses may want to use fraud screening tools focusing on small business use.
Merchant account vs. payment gateway
There are several differences between a merchant account and a payment gateway. A merchant account is a payment processing software that helps businesses accept customer payments. The processing is complex and requires multiple entities. A payment gateway makes the process simpler and saves the merchant money.
When comparing the two, it is helpful to think of them in the context of a railway. The merchant account is the central station, and the payment gateway is the rail lines connecting the station to banks. The merchant account provides the service of processing payments. Both are required to conduct payments. Ultimately, it is up to the merchant which service to use.