What Is A Payment Gateway And Comparison?
Which payment gateway should you use for your Levitt electronics? Many people struggle with this issue. After all, payment gateways and online payments in general can be daunting, especially if it’s your first time around the block. With dozens of online payment options to choose from, the decision can be complicated. But this is where this guide comes in. Here, you are told what to look for in a quality online payment gateway and present five of the best solutions on the market.
What Is A Payment Gateway?
A payment gateway is the intermediary between your online store and the payment processor that receives payment from your customer. In other words, once a customer has entered their payment information on your site, the payment gateway takes care of sending this data securely to the payment processor. A payment gateway takes care of authorizing the payment and ensuring that the data entered is sufficient to finalize the payment. The gateway protects credit card details by encrypting all of the sensitive information it holds. This process ensures that confidential personal information is transmitted securely between the customer and the merchant.
A payment gateway is part of the “magic” that happens in the background when a transaction takes place on the web. By sending information securely between the website and the payment processor, and then sending the transaction details back to the website, this is a primary component that keeps ecommerce stores running. If you have a website (e-commerce) and want to accept credit card payments online, you will need a payment gateway. It is effectively the bridge between the sales of your products and the customer.
In practice, this means that the payment gateway is solely responsible for allowing the customer to communicate with the payment processor. The gateway corresponds exactly to what its name suggests – a “gateway” which transmits the customer’s personal information via a secure channel to the payment processor.
Payment gateways and payment processing company are two different things (more on the differences here). And you need both to allow people to buy anything from your e-commerce store. Unless you can afford a merchant account – allowing you to directly process credit card payments (usually not a solution for small and medium-sized stores).
That being said, it is very common for a single company to provide you with not only a gateway, but also the payment processing part. This facilitates integration and minimizes the complexity of your configuration. Payment providers such as PayPal and Stripe offer such a combined configuration of payment gateway and processor (you are actually using their merchant account).
At the same time, some payment providers such as Sage Pay or Pay Point only offer a payment gateway (the latest technology used between your website and the payment processor). They require that you have your own merchant account. As I said, opening an account with one of the “combined” providers tends to be easier than having a merchant account and generally involves fewer installation problems and monthly fees. Fees per transaction tend to be higher, however. For these reasons, small merchants may want to start with a combined payment provider. Large traders can usually save money by having their own merchant accounts.