Merchant Account VS Payment Gateway

Setting up an Ecommerce website can get confusing and make you pay for unexpected fees if you don’t have a better understanding with merchant account vs. payment gateway.

Merchant Account VS Payment Gateway: What Is a Payment Gateway?

A payment gateway is a service offered a financial institution to process credit card transactions for your business. If your clients or customers are purchasing products or service from your online store, they enter their credit card identification number in the checkout or billing process. Your online store sends that information to your payment gateway to authorize or to decline the transaction and to process the payment.

Merchant Account VS Payment Gateway: What Is a Merchant Account?

A merchant account is an online bank account that temporarily holds the merchant’s money before being moved to the merchant’s actual bank account. When a successful sale has been made, the money from the credit card payment will be moved to the merchant account, and it will stay there within 2-3 days before being transferred to the business bank account. Your merchant account serves as your temporary bank account for the money incurred from online sales.

Merchant Account VS Payment Gateway: How Do They Work Together

A merchant account vs. payment gateway works together by processing the credit card payment made by your customer until the money incurred by a successful sale is deposited to your bank account. It begins when your shopping cart at your online store computes the total amount of product to be purchased by your client, the customer’s billing info, and them forwards all data to your payment gateway.

The payment gateway will forward the data to your credit card processor for authorization. After the data has been received by your credit card processor, it will be verified, and then the approval code will be sent back to the payment gateway.  After the payment gateway has received the approval code, the transaction will be settled automatically. Transaction settlements may last for few minutes or few hours depending in the item being purchased. Also, merchants selling custom products can settle the transaction manually the next day. After the payment transaction has been settled, the payment gateway sends the approval code to the shopping cart to inform the customer for successful payment made.   The best thing about merchant processing the best is that all these things can happen in less than a minute.

Things to Consider in Looking for Merchant Account VS Payment Gateway Solutions

When looking for companies that provide payment gateway and merchant account solutions, choose those companies that do not offer long term contract. Through this way, you can easily cancel your merchant account contract if you don’t want dealing with penalty charges or fees. Also, choose merchant processing service providers that do not require your website to get live first before getting an approval. Through this way, you can get your payment gateway setup and then tested before your online store goes live. Also, make sure that you understand all of the things stated in the contract to prevent your business from paying for hidden costs and services that you don’t need.

Merchant Account Providers - Helping Businesses Stay Ahead in the Race

For entrepreneurs big and small and ventures like legal firms, retail shops or real estate companies, running a business comes with many responsibilities. And one among the several challenges those businesses face is to be able to collect and process payments made by customers through credit and debit cards. Getting started with a secure merchant account and making the business / products / services accessible to a wider audience is the first major hurdle that any new business faces. This responsibility is therefore outsourced to merchant account providers who create merchant accounts on behalf of the business and process payments made towards the business.

Who is a Merchant Account Provider?

The entire process of credit card payments and their processing is today being handled by companies who are widely known as Independent Sales Organizations (ISO). These ISOs are responsible for selling merchant bank accounts to merchants or business owners, processing the payments through a dedicated gateway and submitting the same to a Visa or MasterCard network. They are also responsible for providing technical support through the entire process and they ultimately set the price for the services rendered. ISOs are also known as merchant account providers because of the kind of facilities they directly provide to merchants.

Services Provided by Merchant Account Collection Agencies

As described above, the entire gamut of payment collection and their processing is done by merchant account providers on behalf of the merchant. However, this overtly simplistic service includes various other crucial facilities that a collection agency or ISO needs to provide in order to offer a seamless service in credit card processing. These include:


• POS Equipment Rentals - No matter what kind of business one handles, merchant account providers should be able to provide credit card processing equipment anywhere and everywhere. While at the physical point of sale location, companies need to provide electronic card readers and for portable or mobile businesses that need to make collections from the location of the customer, mobile (GPRS) or internet services need to be put into place.

• Anti-Fraud Measures - Only secure payment gateways that offer several layers of anti-fraud assistance both to the merchant and the merchant’s customer will increase customer loyalty.

• Offshore Assistance - Since a number of businesses function across time zones, it’s important to provide a secure payment gateway that is available to customers across geographies.

• Technical Support - The success of a good credit card processing platform depends on its technical systems and the quality of software used. For example, QuickBooks, which provides online POS assistance to merchants, helps businesses sync their sales and inventory in a timely manner. This also helps merchants, associated with larger businesses which are spread across geographies, instantly know which product or service has been sold and to whom, as well as track the status of the credit card payment.

What’s more, these kinds of software are also able to minimize data errors or repeat entries and help merchants authorize secure transactions.

To initiate error free credit card transactions and avoid duplicate or slow credit card processing, assistance from merchant account providers will help businesses grow faster and reach a wider base of customers.

Everything About Automotive Credit Card Processing

The automotive world is vast, and running a business associated with automotive can be quite challenging. Whether you are associated with tires, fuelling or re-trading of old tires, or with sales of auto parts and servicing for cars, your business will require 24x7 monitoring. For automotive business owners, managing their credit card payments along with the nitty-gritties of their business thus proves very difficult.

To ease the load on small automotive business owners, several merchant processing institutions are now providing unique solutions through faster payment gateways created exclusively for automotive businesses. These solutions are not only helping automotive business owners better understand their monthly sales and profit scores, but is likewise helping customers pay their bills easily.

Various Payment Gateway Solutions

Automotive credit card processing has today blossomed into a lucrative option, not just for merchant banks and vendors but also for customers. There are innumerable payment gateways secured for transactions on automotive businesses, which help swifter processing of credit cards and the consequent cash delivery to the merchant’s account.

Customers can now access payment gateways online from the comfort of their homes and also have the luxury to make payments in loans through various schemes. This works well for large and small automotive business owners to accept payments wherever and whenever.

Be it an immediate payment at the point of sale location in the store or a payment through a mobile device – every kind of transaction can be keyed in through the different gateways. There are online payment gateways, mobile credit card processing for iPhones, Android devices and other smart phones, as well as several wireless processing options.

Several Benefits of Automotive Credit Card Processing

There are several benefits for both the merchant and the customer who use the modern tools in automotive credit card processing gateways.

• Payments can be processed through multiple devices and platforms, including wireless services.
• Quicker transactions whose updates are sent to both the customer and the merchant instantly.
• Works well for large automotive businesses which function across a multi-merchant or multi-user platform and operate out of more than one location.
• Allows superior business growth to mobile automotive businesses like towing services or urgent on-site repair facilities.
• Credit card processing is made easy for fleet owners who need processing of bulk payments.
• For customers, it gives greater scope to get special financing especially for services like an urgent car wash and car or tire servicing or while getting special rebates from auto dealers on purchasing a brand new car.
• Several loan options are allowed for customers who pay using particular automotive payment gateways. A period of 6 months to 1 year is often allowed on payments which are costly.
• Special waivers are allowed on payments which are made instantly. For example, for a body paint and repair service of $500, a customer who pays on the spot can expect a $50 cash back if he/she makes his payment using a particular merchant credit card processing gateway. Likewise for merchants, special discounts and rebate coupons in processing charges are also offered on certain bulk payments.

Today, there are several automotive credit card processing options like Payscoutwho provide both superior and secure electronic and wireless credit card processing solutions for customers across the US.

Credit Card Processing Made Easy for Small Businesses

Small businesses run on a tight budget and every little bit counts. Also, customers want sales to go through quickly and hence, they usually offer credit cards against purchases. For a small business owner, this means investing in a card reader, setting up a merchant account and paying a service fee to accept credit and debit cards. However, you should know a few things about credit card processing before you sign a contract with a company offering merchant services. 

We’ve listed below for you a few things you should consider and do before short listing a particular merchant service provider. 

1. Comparison Shopping is Necessary

Credit card processing deals tend to vary considerably. However, the only way to make sure you have the best deal is by comparison shopping. Get in touch with at least five different credit card companies and compare the rates along with features and deals. Make sure you also check the fees and penalties applicable on the account.

2. Understand Costs

Costs like interchange and assessments are critically important while evaluating credit card companies. Interchange refers to the fee charged by card issuing banks to processing banks for the acceptance of card transactions. These charges are the same for all processor banks. Visa and MasterCard charge assessment fees and they are the same for all processor banks. These fees influence how much you pay the company.

Big businesses save money by paying credit card fees through an interchange pass-through pricing model. Even if you do not understand the pricing, rate and fee structure, you can still save money by asking for the interchange pass-through pricing model.

Apart from these costs, you will be paying monthly fees like monthly statement payment fee, monthly minimum fees, gateway monthly payments, transaction fees, etc. These rates tend to vary and the only way to find out exact rates is by comparing multiple service providers.

3. To Contract or Not to Contract

Entering into a contract with a merchant processing services provider is a good way to ensure stability and regular sales. Companies may also urge you to get a contract; but, it is not really necessary. You can cancel your contract at any time and some processors are also willing to waive the contract for your business.

4. Equipment Availability

Merchant services companies are willing to offer small businesses a range of equipment to swipe debit cards and credit cards such as POS terminals, PIN pads, wireless terminals, tablets and mobiles with card reader software, etc. However, all providers offer equipment purchase or rental options. For small business owners, this can really help save money and it also allows them to return the equipment in case they decide to switch companies or go out of business.

Apart from real time merchant services, it is a good idea to incorporate online small business credit card processing services on the company website. For small businesses, this increases the sales they get without the need for a merchant account.

Third party providers now offer many more innovative and interesting credit card payment options and solutions for new businesses to increase their exposure and sway customers into buying products.

Credit Card Processing – How Does it Work

While the process of purchasing goods and services by swiping your credit card might seem very simple, there is actually a rather complex process at work behind this seemingly easy transaction.

We have explained below, in 6 easy steps, how credit card processing works.

1. The Purchase 

When you like a product or service, you purchase it with your credit / debit card, instead of cash. This is the ‘point of sale’ or POS, where your credit card details are keyed in. The POS could be the actual electronic card reader in a retail store, or it could be the merchant’s website through which you make your payment.

2. Data Transmission

Once the card is swiped in the reader, or its details keyed into a mobile device, or as in the case of an e-commerce portal, the credit card details keyed in by the customer – the details are recorded and transmitted through a ‘payment gateway’ application.

The payment gateway facilitates the transfer of sensitive card information between the POS (website, mobile device, retail store card reader) and the merchant’s acquiring bank, where the merchant/shop owner has his business account. Often, a third-party, called the payment processor, which functions on behalf of the merchant bank, collects these details. 

3. Payment Processor Screenings

Payment processors, usually a third-party employed by a merchant acquiring bank, screen and forward the card and transaction details to the merchant bank, the card association for verification and finally to the customer’s bank, which issued the credit card. Additionally, the payment processor also looks into aspects like the card’s country of origin, its former transactions and ensures anti-fraud measures to authenticate the transaction. 

4. Approval

This is a crucial step which involves the card association (Visa, MasterCard etc.), the merchant acquiring bank and the customer’s issuing bank. These institutions screen through every detail about the transaction. Though done through software applications, these processes determine the authenticity of the card, its expiry date, the card-holder’s details and the available balance in the customer’s account. 

Once the security screening and verifications are done by these institutions, the approval is sent back electronically to the payment processor. The payment processor transmits the approval once again via the payment gateway and back to the merchant. In case a transaction is not approved, the merchant receives an alert.

5. Completion of Transaction

This is the final stage where the transaction is all set to be completed. The merchant extracts copies of the receipt from the card reader, one for the customer, and the other as a copy for the merchant bank, which requires the customer’s signature. 

In case of a mobile or e-commerce website, the customer receives a message alert from the issuing bank, on the amount of money debited from the account, and the date and venue of the purchase.

6. Submitting a Closure

Closures are statements of all the credit card transactions made in a single day, which are forwarded by the merchant to the merchant acquiring bank. The acquiring bank then collects the funds from the respective issuing banks and deposits that amount into the merchant’s business account. This typically takes 48 hours.

Advanced computing technologies, employed for credit card processing today, allow the above complex procedures to be completed within a few seconds.