Should you opt for a payment gateway or should you consider setting up a merchant account instead? In order to know the answer to this question, we need to dive right into what each offers along with their pros and cons.
What Is The Difference?
Before we begin with the features of each, it is important that you understand what each term means. A merchant account allows a merchant to process payments made by debit and credit cards. It is not the same as a bank account because in a merchant account you are not in control. A merchant account is a place where the deposits made are held. Merchant accounts can differ from each other in various ways. For example, some may allow you to accept various types of currencies, have shared high risk business merchant accounts, or offer a better underwriting process.
On the other hand, a payment gateway enables payments to be processed and authorizes payments made through credit or debit cards. It is used by traditional and online business owners. There are different types of payment gateways, and what they provide may differ. For example, some payment gateways allow you to accept multiple payment methods and also come with fraud protection. While others may enable you to thoroughly understand the data with regards to the payment. Some payment gateways allow you to automatically manage payment information.
Payment gateways authorize payments.
The Good And The Bad Of Having A Merchant Account
If you are running an online business, then a merchant account can be beneficial to you. You can easily accept payments made through credit cards and choose software that helps you safely use your merchant account. It is a flexible option to access orders from your customers anywhere in the world. The reason for this is that it provides processing of multi-currency payments. A merchant account can save you from problems that occur due to problems in the bank for processing credit card payments.
The problem with a merchant service is that there is a chance of it getting hacked. This can pose a lot of risk for you and your business. It can become difficult for you to determine the authenticity of the transactions that take place. This can further complicate the issue at hand. As the number of fraud cases rises, your business can suffer a big loss due to the costs involved.
There are higher risks involved in setting up a merchant account.
Pros And Cons Of A Payment Gateway
A payment gateway is a great and easy way to accept transactions. It does not require much expertise which enables anyone with minimal computer knowledge to be able to accept payments and use a payment gateway. As a business owner, you do not need to wait to use it as you can start using a payment gateway right away. It is low on risk and provides protection to both the customer and the merchant. There are a plethora of features that make a payment gateway beneficial to both the customers and the merchants. You can choose which features you want according to your requirements.
But there are some problems. A payment gateway is prone to problems of a software tool. If there are technical issues, then it can take time to fix those problems. In addition, since a payment gateway provider has all important financial information of the customer, it can be a little risky. This is the case when some unauthorized individual tries to get their hand on the information.
While both merchant services and payment gateways can be beneficial, a payment gateway is more flexible and provides you with less risk. It enables you to accept payments from a wide range of payment options which in turn are more beneficial for the growth of your company. A payment gateway is less risky since the instances of fraud are much lesser. This enables you to stay protected always and it protects your customers as well. Customers are more willing to use payment gateways since they are more widespread and safer.
If you want to invest in a payment gateway provider that enables you to accept payments with utmost ease, then we recommend Shopify. Shopify has multiple ways in which you can accept payments for your online store. It is PCI compliant so you know all the transactions securely take place in Shopify. Customers are more willing to do purchase from you when they are sure it is safe to purchase from your store. Shopify enables your store to automatically become PCI compliant when you power you store through Shopify. There are loads of integration options available too.