What’s an acquiring bank and why you need one
Discover the difference between a payment processor and a payment gateway, and how a solution that covers both can benefit your business.
The card payments world is full of specific terms that overlap and can be difficult to understand.
‘Payment processor’ and ‘payment gateway’ are two examples that often get confused with each other. They fall into the black box of payments, somewhere between a customer making a payment and the money landing in the business’s bank account.
In this article, we’ll open up this black box and help you understand the difference between a payment processor and a payment gateway, their roles in the payments flow, and how a solution that covers both can benefit your business.
A payment gateway is a service that helps businesses initiate payments.
It provides them with various channels and services for their customers to make payments online. Gateways can be provided by a business’s bank, or exist as a separate service that connects to one or more payment processors.
However, not all payment gateways process all types of payments. Some only focus on ecommerce payments while others focus on in-person payments. To reduce integration complexity and future-proof your business, it’s important to choose a gateway that processes multiple types of payments.
A payment processor is a company that processes payments on behalf of a business’s bank.
It usually operates in the background, making sure processed payments comply with rules and standards in the country that the business operates in.
After receiving payment information from a payment gateway, the payment processor communicates it directly to the payment network and authorizes and clears/captures the transaction.
A payment gateway helps businesses initiate payments and a payment processor handles the technical aspects of payment processing on behalf of an acquiring bank.
A payment gateway and payment processor are usually two separate systems. However, having both in one can increase efficiency and reliability of the payment process and improve speed of innovation.
Although payment processing is over in a matter of seconds, quite a few steps happen during this time.
Let’s start from the beginning:
At Adyen, we simplify and improve online payments and in-person payments for businesses and their customers. We consolidate a payment gateway, payment processor, and an acquiring bank in one platform for both online and in-person payments. Managing payments is easy when you only have one contract and one party to interact with to optimize your business performance.
Our direct connection to global and local card networks will allow you to benefit from local market conditions, improving authorization rates and lowering transaction fees.
Explore Adyen’s payment-related services and features, such as:
Now you have a better understanding of the payment processing flow and how funds move from your customer’s account to your business bank account.
Here is a summary of the most important takeaways:
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