Payment Gateway vs Payment Processor: Understanding the Key Differences

Payment Gateway: Bridging the Gap Between Merchants and Banks

A payment gateway is a software application that acts as an intermediary between the merchant's website and the bank. It securely captures customer payment information, encrypts it, and transmits it to the payment processor for further processing. Payment gateways provide a seamless user experience by enabling customers to make payments using various methods, such as credit cards, digital wallets, and online banking.

Payment Processor: Handling Transaction Processing and Settlement

A payment processor is responsible for the backend transaction processing and settlement. It securely transfers payment information between the payment gateway, banks, and credit card networks. Payment processors perform tasks such as verifying transaction details, checking for fraud, authorizing payments, and settling funds into the merchant's account. They ensure the smooth flow of funds from the customer to the merchant, providing transparency and security throughout the transaction process.

Fun Fact: Did you know that the first credit card was introduced in 1950 by Diners Club? Initially, it was only accepted at 27 restaurants in New York City, but it paved the way for the modern credit card industry.

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Agile Soft Systems Inc is a design-led custom software development and consulting company that delivers elite software development solutions in the USA to businesses of all sizes.

We work closely with our partners to offer full advantage of technology opportunities. Our team of experts is constantly thinking of new ways to improve upon the technology we already have to speed up the delivery of practical results.

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