Missing puzzle piece

What Is The Difference Between Payment Gateways and Payment Processors?

What is the difference between Payment Gateways and Payment Processors? There are actually more than a few differences that create the distinction, and we will break it down for you.

As you can imagine, there are many varied pieces of the technology puzzle.

When business owners are considering changes to their credit card or payment processing systems, they want to make sure they are making the best, most cost-efficient and effective decision.

Here are the important pieces of the puzzle to know and understand, as well as how TransAct is involved and helps clients improve the payment process.

Payment Gateway vs. Payment Processor

A payment gateway is actually used by a payment processor. They fit together and are the two parts that make any transaction possible.

You can’t have one without the other regardless of whether the payment is being made online or in a physical location.

The gateway provides the method of passing information. This is very important and detailed information that both banks involved in the payment need. The bank issuing the credit or debit card needs to “talk to” the bank where the payment will be deposited.

What is a Payment Gateway?

As stated above, the payment gateway handles the in-person or online transactions. It is the transactional activity. This covers how much is being paid, by what method and if the payment is authorized or not. This activity in the payment cycle triggers electronic information to be conveyed, in a secure method following SSL and PCI compliant practices, to the receiving bank.

All businesses that accept credit or debit cards will use a payment gateway. This is usually part of the POS System or the merchant service provider’s payment portal, whether they are using e-commerce solutions, have face to face interactions in a brick and mortar location, or they are on-site using a mobile processing device with a customer.

What is a Payment Processor?

In the most basic definition, a payment processor handles the payment transactions between a customer and a business. They facilitate the debits, or the charge, to a customer’s credit card or debit card, and they then transfer the credits, or the payments, to a business’ bank account.

The payment processor distributes and tracks the funds to the business entity through their bank.

How TransAct Gets Involved

TransAct can provide clients with both the payment gateway and payment processor tools needed in the business. Plus, we have our own payment portal that is the hub of activity for TransAct clients who are collecting digital and credit card payments.

Businesses can use any one of the many bundled features, such as mobile processing, payment terminal processing, e-check, POS System integration and so much more.

We created the TransAct portal to be the one central repository for all financial data. Information is not fragmented into many pieces, requiring multiple locations to pull the financial data from in order to make critical business decisions.  The TransAct portal is a one-stop place to view, track, manage and understand the financial transactions for the business. Integrations with Quickbooks makes this process even more streamlined for the business. When needed, you can also track the source of the payment – whether from a terminal or mobile device – and everything is secured with two-factor authentication and usernames and passwords.

Learn more about the reporting systems available from the TransAct portal, and if you have other questions about payment gateways and payment processors, we can review that with you, too.