What is the different with payment gateway and merchant account?



What is the different with payment gateway and merchant account ?

What if a merchant account without payment gateway ?

They both has same fee: setup, monthly, and per- transaction.


A merchant account is something you set up with a bank. It's sort of like a regular bank account, but the banks tend to set a lot more rules you have to comply with before they give you a merchant account.

A payment gateway is a service that is set up to process the credit card transaction. It stands in between your shopping cart and your merchant account.

So, someone chooses to buy something through your cart. Once they enter their credit card details, the payment gateway receives the information, checks with the customer's bank that it's all OK, approves the transaction, and directs the payment to your merchant account, where you can collect it.

Without a gateway, there's no way for the money to get from the customer to your merchant account. The merchant account doesn't do any work. It just sits there, waiting for money to arrive.

The gateway and merchant account each have their own fees, because they are separate services.

If all this is too much hassle, there are alternatives like PayPal—which provides a cart, gateway, and a kind of merchant account all in one. After the purchase, you can move the money that PayPal has collected into your regular bank account.


Not really... The fee structure is usually fairly different. For my gateway (Authorize.net), they charge a flat monthly rate and then a very small per transaction fee. Where I pay the vast majority of my processing expense is to my merchant account provider, who charges around 2.0% of all the transactions I process.

I've been in the eCommerce field for years, and still occasionally get the two mixed up. So don't feel too bad. smile


The 2floor of the answer is perfect, the gateway and merchant account each have their own fees, because they are separate services.


Originally posted in this thread.

Hope that helps


I think what's misleading is that Authorize.net (Most references are to authnet) also provides merchant accounts, which they tend to advertise the processing rate in addition to their gateway fee. This leads to the notion that a payment gateway is one in the same with a merchant account.


One of the best articles I have seen that explains the differences between gateways, processing companies and several other entities involved in payment processing is at http://storecoach.com/blog/whats-difference-between-payment-processor-gateway/

As a matter of full disclosure, I do occasionally write unpaid articles for the above-mentioned blog, which is why I know that article exists.


Thanx for the information dude! You explained in such a nice manner that i as really easy to understand the concept,