Many small and mid-sized business owners believe they need either a payment processor or a payment gateway. This is especially the case when it comes to accepting credit card payments in your brick and mortar or online ecommerce business store. The truth is that you do not necessarily need one or the other. You may, in fact, need BOTH a payment processor and a payment gateway provider to receive credit card payments or make online transactions. With that in mind, there are a few things you need to understand about a payment gateway vs payment processor so that you can maximize the value of your payment processor.
What is a Payment Gateway?
A payment processor facilitates the transfer of data between merchants, issuing credit card companies (for the customer’s credit card), and the merchant bank (also known as the acquiring bank). A payment gateway is a different, but necessary, part of the credit card transaction. It is a tool through which the issuing banks for customer credit cards transmit approvals for or decline the transactions. Payment gateways are necessary for online transactions. They serve as virtual point-of-sale terminals, which allow businesses to accept payments for goods and services online. Additionally, modern payment gateways such as Bankcard Connect allow businesses to accept payments across multiple channels, including POS systems and software integrations.
For online transactions, gateway payments are secure payment portals through which customers can enter their credit card information for payment. Payment gateways also allow for recurring payments for subscription services, memberships, etc.
As payment technology has evolved so have the uses for payment gateways. In addition to facilitating payment authorizations and approvals, an online payment gateway can also integrate with your accounting or CRM software, allowing it to process transactions on POS terminals or mobile devices. Some payment processors provide you with their payment gateways, while others require their customers to seek the services of a third-party payment gateway provider.
How do Payment Gateways Work?
When a customer initiates an online or in-person transaction, the process may seem simple, but a lot is going on underneath the hood. In a matter of microseconds, the customer can enter their credit card information and the transaction is either approved or declined by the customer’s credit card company. Here’s a look into how all that works:
- The customer places an order and presents a credit card for payment. Since there is no magnetic strip or chip to read with online transactions, you must rely on other verifiable information to confirm the customer’s identity, such as: billing address, customer’s name, credit card number, CCV number, and expiration date. The information is then uploaded via a secure SSL connection to the gateway where it is encrypted before being sent to the payment processor.
- Upon receiving the encrypted information from the payment gateway, the payment processor sends a request to your customer’s credit card bank asking for the funds necessary to complete the transaction.
- The credit card issuer either approves or denies the request, which, once approved, notifies you of the approval and initiates the credit to your merchant account.
Unfortunately, the actual transfer of funds to your merchant account can take several days depending on various external factors, such as the merchant services provider you choose.
What to Look for When Choosing a Payment Gateway for Your Business?
Beyond the basic, expected function of a payment gateway as a tool for transferring secured data for online and in-person credit card transactions, a payment gateway provider may offer a wide range of additional features. Some of these features are important for businesses and may make a huge difference in your decision about which payment gateway provider is the better choice for your business needs.
The encryption process masks the information on a customer's credit card so that it can only be "unscrambled" on the other end with the appropriate key. This process is instrumental in keeping customer information safe and reducing hacking risks.
Yet another tool in the fight against credit card theft, tokenization removes a customer's credit card information from your business network and replaces it with a "token" which is meaningless to thieves who are unable to "reverse engineer" the data back into a credit card number.
Virtual terminals operate like physical credit card machines. The difference is, they are hosted online. This allows business owners to turn any computer into a credit card machine so you can accept payments anytime or anywhere (if using a laptop). Because they are more time consuming than standard credit card readers, they are a better choice for some businesses than others.
Choosing a payment gateway that simplifies the PCI compliance process for your business is golden for you. BankCard Services follows PCI compliance standards with all our hardware and software to help protect your business regardless of how you're getting paid.
Easy QuickBooks integration:
Since QuickBooks is the undisputed leader when it comes to accounting software for small businesses, it makes sense that many small businesses desire easy integration of QuickBooks with their gateways.
Other tools you might expect from your payment gateway include:
- Recurring billing.
- Fraud prevention.
- Electronic invoicing.
- eCheck processing.
- Batch processing.
- Transaction routing.
- Various shopping cart integrations.
Now that you know what to look for, it’s time to introduce you to a payment gateway that offers all these features and more for your business.
Maximizing the Value of Your Payment Process with BankCard Connect
BankCard Services offers widely recognized payment processing services for small and medium-sized businesses in countless industries, including those that have been identified as high-risk businesses.
We take great pride in our commitment to offering fair, transparent pricing, and outstanding customer service and support. We are also proud to offer our BankCard Connect payment gateway rather than requiring our customers to seek out a third-party gateway provider or another online payment gateway for their needs.
We believe this allows you to enjoy a seamless experience when it comes to software integration, payment processing, and your payment gateway. Our gateway facilitates eCommerce transactions, retail sales, mobile payments, and unattended payment solutions (parking garages, ticket kiosks, vending machines, etc.) as well. We believe that offering a unified payment experience helps you stay ahead of your competitors and improves the customer experience as well as your own.
The BankCard Services Difference
BankCard Services goes out of its way to offer pricing that is fair, transparent, and easy to understand. We also offer FREE equipment, month-to-month service with no cancelation fees, and a dedicated account representative to provide you with support throughout our partnership. We believe small businesses have enough to worry about and want to be your partners in business. With that in mind, we offer many tools and benefits designed to help you grow your business. The BankCard Connect payment gateway integrates flawlessly with our payment processing services while providing many features you’re sure to find attractive, such as:
- Detailed reporting.
- Merchant control panel.
- Account updater.
- Payer authentication.
- Point to point encryption.
- Transaction routing.
- Multiple MID capabilities.
BankCard Connect places you in the driver’s seat of your business and allows you the tools you need to process transactions on virtually any platform with seamless ease.
Combine that with BankCard Services’ values and priorities as a business and there is much to appreciate about the powerful combination of BankCard Services for payment processing and BankCard Connect for your payment gateway. Schedule a meeting today with a BankCard specialist to get started or complete the pre-application online to begin.
Mickael is an entrepreneur and the Co-founder of Bankcard Services. He is a family man and loves technology, innovation, and soccer.