Posted by Lawrence
What to consider when deciding between a Payment Gateway or a Payment Processor for your online store.
Gateways and Payment Processors, what’s the difference? The difference is, the true real-time gateways such as Authorize Net and PayFlo Pro are just what the name implies; “gateways” between your e-commerce enabled web site and your merchant account. As a rule they take a smaller percentage than the payment processors like 2Checkout and PayPal. For high volume sites these gateways are the way to go. They are faster, making the transactions in real-time, and they are cheaper. But, they can be expensive to set up. You need a Business Bank Account - a Merchant Account that allows you to process Credit Cards. There are set up fees, and bank fees that need to be paid in addition to the gateway fees. If you are selling hundreds or thousands items and have a high volume site, this makes sense because the net cost still pencils out to be cheaper in the long run. But what if you are a private individual or a small business selling just a few items from a low volume site? This is where the payment processors like 2Checkout and PayPal begin to make sense. The cost per transaction is higher, but there is no or very little set up fees. And they basically operate as your gateway and merchant account. They process the payment transaction, notify you and your customer when the transaction is complete and will cut you a check or deposit the proceeds into your business or personal account. Which is best? That’s up to you and your needs. The best things to do is carefully weigh the costs and benefits of each and choose the one that makes the most sense for your situation.
