Payment Gateway vs Merchant Account

Almost every type of business in the world, regardless of size, needs to have a capacity to process online payments. Otherwise, today’s merciless marketplace and competitive environment may not have a place for it. Furthermore, the advent of the internet requires businesses to set up reliable online payment systems so that they can conveniently receive different forms of payment, including credit cards, debit cards and ACH payments.

ewallet malaysia rm30 Online retailers can increase the profits of their businesses if they provide efficient, reliable payment processing systems. For receiving internet payments, two services are needed: a merchant account and a payment gateway. Usually not understood properly, these two important constituents of an internet payment process work independently and symbiotically to easily complete payments from consumers to merchants.
So, where is the dividing line? Just how do merchant accounts and payment gateways function separately and mutually? This article will assist in breaking down the pieces so that the difference between the two services is understood.

What is a payment gateway?

A payment gateway refers to the service that enables merchants to process online payments. When buyers order items from an internet shop, they will provide their credit card numbers during the checkout process. When this happens, the site will transmit that credit card information to a payment gateway to approve the transaction and complete the payment. When the details of the credit card information sent to the payment gateway is similar to the information on the records of the credit card firm and the amount is authorized, the payment gateway will consequently transfer the payment from the credit card of the buyer to the account of the merchant.

What is a merchant account?

A merchant account is generally more complex than a payment gateway. It refers to a bank account that will hold the cash of a merchant for a short time before it is transferred to his real bank account. Following a successful sale on an e-commerce site (made possible by a payment gateway), cash will be channeled into the merchant account of the seller and it will stay there temporary for some days, normally 2 and 7 days. Thereafter, it will be moved to the seller’s bank account either automatically or manually. To put simply, a merchant account is a holding tank where the cash from successful internet sales is kept for a limited period of time.

It’s important to mention that there are two types of merchant accounts: dedicated and aggregate merchant accounts. A dedicated merchant account refers to an account set up solely for the merchant. It is an internet-based bank account set up to give the merchant the ability to accept online payments. A major benefit of a dedicated bank account is that it enables you to negotiate custom rates for your sales, since the rates are calculated according to the volume of sales you realize and the kinds of items you sell. So, this type of account will give you the ability to have more control of your cash and negotiate custom rates based on your needs. If you want to obtain a dedicated merchant account, you will need to undergo a thorough process, which takes time and entails sending over some key information about yourself and your company.

On the other hand, an aggregate merchant account is an account where your cash will be combined with those of other companies. Although you still need to give information about your company and the kinds of items you sell, the steps involved in securing this type of account is not as complex as that for a dedicated merchant account. The main disadvantage of an aggregate merchant account is that it doesn’t give you full control of your finances and you basically can’t negotiate the rates.

Advantages of merchant accounts and payment gateways

With a merchant account, you will be able to receive different kinds of online payments, monitor transactions easily and receive payments faster. It is a good choice if you want to run a successful online business. If you have a merchant account, it will assist you increase cash flow and stay competitive in the current dynamic world of business.

Payment gateways are important for retailers who want to make their online transactions simple, efficient and reliable. If you use a payment gateway, credit and debit card payments can easily be authorized and save you the hassle of having to deal with unreliable payments. To the buyer, such transactions are not any different from the ones done in a store.


A merchant account and a payment gateway, though they are different, function in perfect harmony to make it possible for merchants to process credit card transactions and receive the cash from the transaction in a bank account.

Merchants are different; therefore, one payment system may not sufficiently meet the needs of each merchant. So, you should talk to your processor concerning selecting the right gateway solution for your online business and ensure the provider offer quality and reliable services.

Egopay is a one-of-its-kind company that is renowned for providing flexible, trustworthy and easy to work with payment services. The company’s years of experience in payment integration assists merchants get the right solution that meets their specific business needs – offering the best, robust systems for attracting more consumers and generating increased sales. If you contact Egopay, one of the company specialists will assist you determine the correct payment system you should adopt to sail your business to higher heights.

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