Understanding the Difference Between Payment Gateways and Processors
A large number of vendors mistake payment gateways and payment processors, though they play separate roles in processing flow. Payment gateway (e.g., Stripe, PayPal Pro, or Authorize.Net) is the virtual terminal that makes the customer’s information securely delivered to banks, whereas payment processor (e.g., First Data, Worldpay, or Chase Paymentech) provides the transfer of funds directly between accounts. For high-risk companies, the correct blend is important—some offer both (e.g., PayPal Payments Pro), and some call for independent integrations. Gateways are concerned with security (3DS, tokenization), while processors are concerned with settlement speed, interchange fees, and chargebacks.
Why High-Risk Merchants Need Specialized Solutions
Firms engaged in high-risk domains require a distinct payment-processing mechanism, okayed by, counter to which, customized financial services are required to serve their payment-processing needs. Payment gateways and processors suiting the high-risk profile of these merchants with enhanced features, like most intelligent fraud-screening tools, flexible recurring billing options, and access to offshore banking relations, are just what these merchants need. The best technical layout for high-risk merchants usually means coupling a stand-alone payments gateway like NMI or Braintree with a dedicated high-risk processor such as Durango or PaySpacelv-this duo is a proven way to ensure higher approval rates than one-platform solutions. Distinction between the gateway and processor functional duties creates key differences that merchants need to appreciate. Payment gateways largely handle the technical aspects of transactions and present other required infrastructures – API integrations for ecommerce websites, PCI compliant secure hosted checkout pages, real-time fraud prevention features to filter transactions, and so on.
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