Merchant Account Payment Gateways

Many small and medium-sized business owners have seen the necessity of extending their operations through the use of the internet. This is naturally meant to serve the sole purpose of attaining more sales from a wider market, one that spans globally.

Making the internet a new method of selling their products, however, obliges them to learn the electronic and financial processes that are involved to complete a sale online. While these may be absolutely novel for many, such processes are actually easy to understand.

One of the most confusing points regarding online sales transactions, however, is the difference between a merchant account and payment gateway.

A merchant account is an account provided by banks to a business owner. With such account, the business can accept and process payments made with major credit cards.

Even when sales transactions are made through online means or through phone calls, credit cards may still be accepted. However, only the credit numbers are provided by the buyers to the vendors under these methods. There are actually no cards present.

Because of this, most merchant account service providers consider these risky. This is the reason why they often charge higher rates for those into online sales transactions.

The risks in operating online shops are very much for real. There have been many cases of fraud made in the use of credit cards in buying items through the internet. Despite this downside, however, the importance of having a merchant account cannot be ignored.

This is, after all, the only way that a business can begin accepting credit card payments, whether online or not. Without it, a business can surely be less competitive since an increasing number of customers find it more convenient to shop with credit cards instead of bringing along wads of cash with them.

A payment gateway is what connects the online business to the merchant bank. As its being a gateway implies, every piece of information submitted to complete an online payment first passes through it.

Being a software, the payment gateway confirms automatically the validity of the card number by cross-checking it with the customer information and shipping addresses.

The most important feature of a payment gateway, however, is its encryption system. It significantly lessens the possibility of fraud because it utilizes strong encryption systems. Therefore, it assures buyers that their information is well protected from theft through hacking and other forms of cybercrimes.

For businesses that have not yet gone into internet-based selling, a merchant account is enough. However, if they decide on selling and accepting payments through online means, they will certainly need a payment gateway to increase efficiency and to secure the information the send or receive.