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“Payment gateway and payment processor? Aren’t they the same thing?”
This question might have arisen in your mind as well, seeking the curiosity of how they are different.
While the payment gateway securely captures customers’ payment information, the processor works in the background and ensures the funds are transferred.
This blog is your detailed guide to understanding and learning the difference between a payment gateway and a payment processor.
Let’s dive in.
What is a Payment Gateway?
A payment gateway is a service that securely collects and transmits payment information from customers to payment processors, enabling businesses to accept payments.
It is the front-end facing solution that offers multiple payment methods through which payments can be collected from customers. It is up to the customer what payment method they would like to use for transactions.
What is a Payment Processor?
A payment processor works in the backend to facilitate the actual transfer from the customer’s bank to the merchant’s bank. It communicates with card networks and banks to authorize and complete the fund transfer. While authorizing the transactions, it can help businesses to simultaneously deploy fraud prevention and security measures.
They both are essential parts of the payment process, but they handle very different tasks. To understand this better, let’s explore the key differences: payment gateway vs processor.
Payment gateway vs Payment processor: Key Differences
| Criteria | Payment Gateways | Payment Processors |
| User interaction | Directly interacts with the customer through the checkout page. | Operates in the background with no direct interaction with customers. |
| Security & compliance | Security is maintained by replacing the actual card data with a non-sensitive and unique character, namely a token. These tokens hide original card details.For compliance, payment gateways follow PCI DSS standards that help in avoiding data breaches. | Processors rely on a real-time fraud detection mechanism involving machine learning algorithms for blocking suspicious activities.They also maintain compliance with country-specific regulations like GDPR, for preserving user privacy. |
| Integration with business systems | Easily integrates with websites or applications using plugins, APIs, or hosted checkout pages that do not need extensive coding. | More complex to be integrated, as it usually requires connection with your bank account, in-store POS hardware, or backend systems, which consumes more time and technical effort. |
| Handling failed payments | Provides reactive handling, displays failure messages, allows retries for failed payments, and even suggests alternate payment methods. | Adopts proactive detection of the failure cause and communicates the status to the gateway. |
| Dependency | Dependent on the payment processor to authorize and complete transactions. | Depends on the payment gateway to collect customer details. |
| Role in transaction | Capture and transfer the payment information securely to the processor. | Authorizes and processes payments by communicating with banks, card networks. |
How does ChargeOn help?
Businesses using Salesforce often face difficulties in managing payments. They relied on external payment gateways, third party tools or manual processes that were inflexible, time-consuming, and offered limited visibility.
These processes were handled outside Salesforce, limiting the businesses’ ability to easily map payments to their specific Salesforce objects.
To overcome these challenges and streamline the payment process, ChargeOn is your ultimate solution. It is a Salesforce-native Payment Processing and Orchestration Platform that:
- Centralizes all payment activities inside Salesforce.
- Support diverse payment methods (instant, recurring, scheduled).
- Offers flexibility to map payments to any standard/custom Salesforce object.
- Enhance security
- Provide real-time insights through reports, dashboards, and transaction history, and much more!Â
ChargeOn also provides real-time integration with 14 key payment gateways like Stripe, PayPal, Authorize.Net, Razorpay, and more.
Final take
A payment gateway and a payment processor work hand in hand, but they serve distinct purposes in completing digital transactions. The gateway securely captures and transmits payment details, while the processor communicates with banks and networks to move the money.
Businesses do not need to choose one over the other; they typically need both. Understanding how these two components differ, yet complement each other helps you select the right payment solution that ensures security, speed, and a smooth checkout experience.
