One of the most frequently asked questions we receive is to explain the difference between the merchant account and the gateway?  Whether you’re new to processing credit cards or a seasoned business owner, it is very important to understand the purpose of each.  The more knowledge you have, the better you can position yourself and your business for strategic growth.

So the question is…

What’s the difference between a merchant account and payment gateway?

Let’s first start with the merchant account.   Merchant accounts are the last point before funds that received approval are paid out to you.  Merchant accounts act very similar to a normal bank and are subjected to the same federal regulations as their adversaries.  After you successfully process a credit, debit or alternative payment the money is transferred to the merchant bank.  The merchant bank then works on a payment schedule where the funds are deposited in your bank.  Typically funds can be held up to 7 business days but here are Merchant Competitor we understand that access to funds the next day are important asset to a thriving business.

Why do I need a gateway when I have a merchant account?

A payment gateway is your direct relationship between the customer and their payment method.  Businesses are directed to send their payment information direction to the payment processor and never to the merchant bank.  The payment gateway works directly with the major credit card brands to ensure information is securely encrypted and transmitted using the highest standards of PCI compliance.  For example, when a customer goes to your online site and pays using a credit card.  A payment gateway will take that information and cross reference the validity with the credit card issuer.

So how does it all work…

1. The customer makes a purchase using his or her credit card.
2. The integrated payment gateway interacts with the credit card networks to determine if there is a successful transaction.
3. Once an approval is successful, the processor and the acquiring bank receive the funds from the issuer bank.
4. From there the acquiring bank will deposit funds info the merchant’s normal bank account

Why are there so many steps?

Due to federal rules and regulations there are many steps put in place to protect the consumer, bank, and business.  Each step has its own PCI compliance, regulations, risk management and procedures that ensure the highest level of security.

How to accept credit card payments with WooCommerce

What is WooCommerce?
WooCommerce is a powerful open-source ecommerce plugin for WordPress.  WooCommerce states that it has over 1 million downloads and 20% off all ecommerce sites worldwide are using the online shopping cart platform.  The reason for its popularity is its simplicity and ease of installation.  It is not uncommon for premade templates for WordPress to come with a preinstalled version of WooCommerce plugin.  Many have found WooCommerce to be one of the most user friendly shopping carts on the market.

Why do I need a gateway for WooCommerce?
Woocommerce is a shopping cart plugin and not a payment gateway. Although it comes with the option to accept PayPal, that is typically not the best solution for most businesses.  A gateway is needed to process credit cards such as VISA, MasterCard, Discover and AMEX.  A gateway sends the acceptance or decline response back to WooCommerce letting your customer successfully process an order.  From the gateway you can also setup a variety of security features that protect both you and your customers from fraud.  A gateway can be easily connected to WooCommerce using a gateway specific plugin.

Reasons to not use PayPal?
PayPal is a great payment method but it has a lot of downsides, especially to businesses considered high risk. Often PayPal will cancel your account for any number of reasons and hold unreleased funds up to 21 days and in some cases even longer.  PayPal’s transactions fees often are the highest in the industry.
Here are a few categories prohibited from using PayPal as a Merchant Service Provider:
Alcohol
Electronic Cigarettes and Eliquid
Firearms, including ammo and accessories
Jewelry
Tobacco
Tobacco related products

Which gateway is best for my WooCommerce store?
The best way is to get in contact with us and tell us a little more about your business. From there we can match your business with the right Merchant Service Account.  From there we will help direct you to the best solution to fit your business needs.  Merchant Competitor will help you with every step of the process to make sure you can smoothly and securely accept credit card transactions on your WooCommerce shopping cart.