What Is It Going To Be – Payment Platform Or Merchant Account?

Today, no big business can survive long unless they start accepting payments through cards. Gone are the days, where people carry cash for their shopping needs. Cards, a simpler, safer, smaller, and smarter means of payment method, have replaced cash. Hence, need arises to set up your very own merchant account to process online payments.

Are the two related?

Most of the time people get confused with a payment gateway and a merchant account. Although the difference is simple, there is a perfect co-ordination between the two. In order to allow any kind of online transactions, a retailer needs to have both a payment gateway and a merchant account. While a merchant account temporarily holds the funds received from the customer before it is cleared for payment to the retailer’s bank account, a payment gateway simply approves or declines an online transaction.

However, how do you decide which of the two – a merchant account or a payment gateway, will suit you the best? Continue reading to know how different is one from the other and what benefits each has to offer you to help you decide the best choice.

Merchant Account:

  1. It is one of the oldest forms of the online payment system, ever since the inception of credit cards.

  2. It is a kind of contract that is established between the retailer and the credit card companies.

  3. It allows you to accept payment from different sources including debit cards, credit cards, directly from net banking, or from e-vouchers and coupons.

  4. It offers safe, flexible, and fast means of payment options, hence enhancing the customer experience while they make payments.

  5. It is an ideal option for traditional retailers who carry out simple everyday businesses such as running a supermarket, financial institution, or any of the similar kind.

Payment Gateway:

  1. It is a more modern approach to online payment systems.

  2. It essentially acts as a physical check gate that enables customers to submit their financial details online in order to process their payments via their credit cards.

  3. It offers ease of payments by allowing transactions to occur from anywhere, as long as there is a stable internet connection. Customers can make payments at the comforts of their home from a personal computer or a smartphone.

  4. It ensures a secure and a highly encrypted path for payments online, either through a hosted or a non-hosted server, based on the retailer’s choice.

  5. It is an ideal option for today’s online start-up companies, mobile merchants, or any kind of e-commerce.