Merchant Account vs. Payment Gateway: Which One is Right for You

Merchant account, payment gateway, best ecommerce merchant account… trying to determine which merchant services you need can be overwhelming, whether you’re a new business owner or making changes to your established company. For many merchants, understanding the key differences between certain services can be confusing. 

 

For example, merchant accounts and payment gateways often leave business owners scratching their heads wondering what’s the difference between the two and which one do they really need. If this sounds like your current situation, the following information will help you distinguish between the two and decide which one is right for your business goals.

 

What is a Merchant Account?

 

Essentially, a merchant account is a type of bank account that allows businesses to accept payments in multiple ways. For example, debit cards, credit cards and ACH payments. When your business accepts a payment, those funds are held in this account. Once that payment is verified, the funds are released and passed on to your business’ bank account. It works as a liaison between your business and the individual card-issuing bank to acquire and settle funds.

 

What is a Payment Gateway?

 

A payment gateway is a critical component to ecommerce. It is the link responsible for connecting your customer’s bank account and your business merchant account, working much like a credit card machine does. Your customer submits payment information via the web, and the payment gateway allows those funds to flow into your business bank account once the transaction has cleared.

 

What’s the Difference, and Which Do You Need?

 

So, what’s the difference between a merchant account and a payment gateway? A merchant account enables your business to receive funds from card transactions. A payment gateway serves as a consumer interface that collects card data. In truth, if you want your business to offer card payment options to its customers and remain competitive, you will need both. 

 

Ensuring your business has the very best merchant services and the ability to accept credit cards will help you increase your customer base. Providing a seamless, convenient payment experience will not only create loyal customers but also transform daily operations into an easy, lucrative task.

Payment industry guru Taylor Cole is a passionate payments expert who understands the complex world of the best ecommerce merchant account. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie with ice-cream on his backyard porch, as should all right-thinking people.