You will often hear the terms "payment gateway" or "ecommerce payment processing" and such like and it's important to draw the distinction between these, and merchant accounts.

Here's the primary difference.

The merchant account is the license, the service that allows you to process Visa, Mastercard and a range of other credit cards online. A merchant account is just a static account like a checkbook or savings account. You need an entity to authorize payment and transfer money electronically. That’s where a gateway comes in.

However, in contrast, the payment gateway (also called a payment authorization service) is, if you like, the technological vehicle that passes credit card information from merchant accounts to the banks for them to process the charges. The gateway therefore approves and settles transactions between your merchant bank and your customer’s bank.

So in essence, you need both of them in order to process credit cards online. Some startups have been known to get these two mixed up, meaning they carefully apply for a payment gateway, but haven't got the merchant account to begin with.

Our Merchant Account services provider already comes complete with a secure payment gateway.

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