Payment gateway vs payment processor: is it the same?

payment-gateway-vs-payment-processor

If A credit card or online transaction might seem like a swipe on the machine or a tap on the phone to you, but it actually involves multiple steps and complex processes. A plethora of information is gathered and transmitted during the several seconds it takes to make a transaction. The two main factors that determine the success or failure of a payment are the payment gateway and payment processor.

Online payments have become a big part of this computer-centred world. Be it buying or selling products, everything has become easier through online payments. A payment gateway and a payment processor help with that.

NTT DATA Payment Services is Asia’s leading “omnichannel” payment service provider, with over 100+ payment options and serving over 6 million+ merchants. It provides multiple payment channels to merchants, thus ensuring an uninterrupted transaction flow. It aims at making payments a hassle-free experience for merchants and customers. 

NTT DATA Payment Service offers secure and seamless digital payment solutions. It provides end-to-end payment acceptance services through online and offline channels. The payment products and services offered by NTT DATA Payment Services are;

What is a payment gateway?

A payment gateway allows online transactions to go through securely. It is a tunnel that connects the customers’ bank accounts to the platform on which they purchase. When a customer places an order on the merchants’ website, they are redirected to a page to select their preferred payment mode along with their details. Once the payment gateway encrypts and approves the payment mode, the payment page will be generated on the merchants’ server. Payment information will then be collected and passed securely to the payment processor, thus conducting the transaction.

Think of payment gateways as an online point-of-sale terminal. While traditional payment gateways only allow online payments for goods and services, today’s payment gateways enable merchants to accept payments through all channels, such as software integrations and POS systems.

Top 10 Advantages and Disadvantages of Online Payments

NTT DATA Payment Services’ Online Payment Gateway:

NTT DATA Payment Services’ online payment gateway is a highly efficient and seamless gateway designed to offer safe online payments. They are integrated with over 50+banks and have 100+ payment options. It aids businesses in growing revenue, alleviates risk and safeguards the customers’ data. Some of the notable features of NTT DATA Payment Services’ Payment Gateway are;

  • Multiple payment options
  • Auto retry option
  • Invoice payment
  • Multibank EMI
  • Highest security standards
  • Highest transaction success rate

Some major payment options provided by NTT DATA Payments are;

  • Debit/credit cards
  • Net banking / IMPS
  • UPI
  • Google pay / PhonePe
  • Challan
  • NEFT/RTGS
  • EMI
  • Bharat QR
  • eWallets
  • Link-based Payments 

NTT DATA Payment Services provide customised payment solutions to suit the merchants’ needs, be it retailers, travel agencies, hotels or airlines. It allows merchants to track and manage all payments they receive from customers and generates payment reports easily.

What is a payment processor?

A payment processor acts as a mediator between the merchant and the financial institutions involved (merchant’s bank and customer’s bank). It authorises credit card transactions and ensures the merchant gets paid on time. Some payment processing services provide equipment for card acceptance, security solutions, and other payment processing services.

In payment processing, the merchant’s bank is called the acquirer or acquiring bank, while the customer’s bank is called the issuer or issuing bank. The acquiring bank settles card transactions for a merchant and gets them paid on time. Sometimes, the payment processor and acquirer are the same. The issuing bank, on the other hand, is responsible for paying the acquirer on time for approved card transactions and collecting payments from the cardholders.

Payment gateway vs payment processor:

Now that we have a fair idea about what payment gateways and payment processors are, the next questions running through our minds will be, are they the same? Do we need both for making payments? To understand these questions, let’s first compare their functions to get a clearer idea of how a payment gateway and a payment processor work.

Payment gatewayPayment processor
A payment gateway is a technology that encrypts and transmits payment details from the point of entry to the payment processor.A payment processor is responsible for facilitating transactions between the customer and the merchant.
A payment gateway communicates the approval or decline of the transaction between the customer and the merchant. A payment processor relays transaction details between the customer’s bank – issuer and the merchant’s bank – acquirer.

As we have seen above, a payment gateway and a payment processor are not the same. They both have their own functions and work together to provide a fast and secure transaction. 

Here’s how the payment gateway and payment processor work

  • Card or online payment details are entered into the merchant’s payment form or shopping cart.
  • The payment gateway encrypts the customer’s payment information and forwards it securely to the payment processor.
  • The payment processor then sends the payment details to the issuing bank, i.e., the customer’s bank.
  • The issuing bank checks if there are enough funds in the customer’s bank account and accepts or denies the transaction.
  • The payment processor communicates the result back to the payment gateway.
  • The payment gateway then notifies the customer and merchant of the progress, after which the transaction is conducted.

When it comes to answering if we need both while making transactions, the answer is yes and no. While making online transactions, you might need both payment gateway and payment processor. The transaction can be successfully conducted by the payment processor only after the payment gateway approves the transaction. It is important to check the security of an online transaction before paying. A payment gateway helps you with that.

But, a payment gateway might not be necessary if you only intend to accept credit card and debit card payments at a point-of-sale terminal. Point-of-sale terminals don’t need a payment gateway because they directly process payments to complete a transaction. 

Conclusion

As we have seen, a payment gateway and a payment processor are tools that have different roles in online transactions. They each play a part in conducting a secure online transaction. If you decide to do business online, it is better to have a payment gateway to enable a secure transaction. If you are a customer intending to make an online payment, it is better to check if the website has a payment gateway for a secure and quick payment.

Leave a Reply

Your email address will not be published. Required fields are marked *