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Whenever you read about an internet
venture, you see phrases like "e-commerce payment processing" and
"payment gateway".
If you are just getting into the field,
you should know a bit about the differences between a merchant account
and a payment gateway - sometimes called an "e-commerce" payment
processor.
If you are looking to peddle your wares on the net, then go ahead and
read this article so you can understand more concerning the way payment
processing works, what it costs, and the options that are there for
you...
Here's the basic definitions:
What is a merchant account? A merchant account is a specific kind of
bank account provided by a financial institution on a set contract. This
will allow you to take credit card payments when conducting
transactions. This is an approval-based product, that has separate fees
and terms and conditions. |
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A merchant account allows you to take
credit card payments from your clients. Depending on the merchant
service, it is possible that you could also be able to accept debit
cards and e-check payments.
For an online business, you will be required to get a payment gateway
after you set up a merchant account. This will provide you with a
shopping cart system with which your customers are able to buy and pay
for whatever product they select.
The asset that a merchant account provides is that it has the capacity
to automate your business - people will be able to put money into your
account on the Internet, around the clock.
What is a payment gateway? - A payment gateway, exactly as the name says
is the direct link between the shopping cart and the bank that processes
the payment. This is generally completed online, in real time and
involves authorization, processing and management of all online
transactions. Immediately after the payment is authorized the
organization would need to access their gateway graphical user interface
in order to finish the transaction.
As you can see, the main difference between the merchant account and the
payment gateway is that one is the license that allows you to take
payment by credit cards, and the other is the medium through which the
receiving of online payments takes place, including credit cards.
You should know that having access to payment gateway does not entitle
you to take credit cards. The merchant account is an entirely different
service that must be applied for and gotten before you are able to
accept credit card payments. Keeping that in mind, many merchant
providers also provide payment gateway services. A well liked payment
gateway is Authorize.net.
Many times when you establish your business you will be given the option
of opening some payment gateways or other services with which you would
be able to receive credit card payments. When you accept this offer ,
many times you will not have to pay for set up charges that you would be
required to pay when you apply for a merchant account. Sometimes, these
may be beneficial when compared to a regular merchant account if you
have low sales volume.
(Generally, if you are looking to do any sort of volume with your
company - and I'm speculating that you are - it's better to simply
obtain a merchant account of your own. It's more dependable, more
affordable over the long haul, and you retain more control over the
payments that are processed - also access to card/customer data)
Remember, a payment gateway will rarely include the approval of
receiving credit cards, while numerous merchant accounts in reality
offer the set up of payment gateways as part of the extra features
affiliated with the contract with you.
Both the payment gateway and the merchant accounts are vital steps in
establishing your online business on the way to complete automation. In
fact, you may not understand how many sales you're forfeiting until you
take the plunge and set up your own merchant account with a gateway.
Chris Rempel |
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