{"id":3688,"date":"2021-08-05T11:20:00","date_gmt":"2021-08-05T05:50:00","guid":{"rendered":"https:\/\/cashfree.com\/blog\/?p=3688"},"modified":"2023-01-10T16:04:48","modified_gmt":"2023-01-10T10:34:48","slug":"difference-between-payment-gateway-and-merchant-account","status":"publish","type":"post","link":"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/","title":{"rendered":"Payment Gateway vs Merchant Account &#8211; Updated Guide"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a8f0164c39bf\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #364250;color:#364250\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #364250;color:#364250\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a8f0164c39bf\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Payment_Gateway_vs_Merchant_Account_An_Analogy\" >Payment Gateway vs Merchant Account: An Analogy<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Payment_Gateway_vs_Merchant_Account_The_Basics\" >Payment Gateway vs Merchant Account: The Basics<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#How_do_Merchant_Accounts_Work_What_are_the_Types_of_Merchant_Account\" >How do Merchant Accounts Work? What are the Types of Merchant Account?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Payment_Aggregator_Merchant_Account\" >Payment Aggregator Merchant Account<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Independent_Sales_Organizations_ISO_Merchant_Account\" >Independent Sales Organizations (ISO) Merchant Account<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#What_are_the_Types_of_Payment_Gateway\" >What are the Types of Payment Gateway?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Payment_Gateways_by_Third_Parties\" >Payment Gateways by Third Parties<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Payment_Gateways_by_Banks\" >Payment Gateways by Banks<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Payment_Gateway_vs_Merchant_Account_How_Do_They_Work\" >Payment Gateway vs Merchant Account: How Do They Work?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#What_is_a_Merchant_Account_Payment_Processing\" >What is a Merchant Account Payment Processing?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Customer_Enters_Card_Details\" >Customer Enters Card Details<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Payment_Gateway_Encrypts_Data\" >Payment Gateway Encrypts Data<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Acquirer_Sends_Info_to_Card_Network\" >Acquirer Sends Info to Card Network<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Issuing_Bank_Authorises_Transaction\" >Issuing Bank Authorises Transaction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Money_Held_in_Merchant_Account\" >Money Held in Merchant Account<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Payment_Gateway_Informs_Customer\" >Payment Gateway Informs Customer<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#How_To_Choose_a_Payment_Gateway\" >How To Choose a Payment Gateway<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Security\" >Security<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Payment_Modes_and_Methods\" >Payment Modes and Methods<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#International_Payment_Options\" >International Payment Options<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Hosted_and_Self_Hosted_PG_Options\" >Hosted and Self Hosted PG Options<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#PG_Costs\" >PG Costs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Ease_of_Integration\" >Ease of Integration<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Customer_Support\" >Customer Support<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-25\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Transaction_Analytics\" >Transaction Analytics<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-26\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#How_To_Choose_a_Merchant_Account\" >How To Choose a Merchant Account<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-27\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Security-2\" >Security<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-28\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Scalability\" >Scalability<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-29\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#FAQs_on_Payment_Gateway_vs_Merchant_Account\" >FAQs on Payment Gateway vs Merchant Account<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-30\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#What_is_Merchant_in_online_payment\" >What is Merchant in online payment?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-31\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Is_Merchant_Account_the_same_as_Payment_Processor\" >Is Merchant Account the same as Payment Processor?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-32\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#What_is_the_use_of_Payment_Gateway_How_do_payment_gateways_work_technically\" >What is the use of Payment Gateway? How do payment gateways work technically?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-33\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#How_does_a_payment_gateway_make_money_How_do_I_avoid_payment_gateway_charges\" >How does a payment gateway make money? How do I avoid payment gateway charges?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-34\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#How_do_I_receive_money_from_a_merchant_account\" >How do I receive money from a merchant account?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-35\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#How_do_I_create_a_merchant_account_How_hard_is_it_to_get_a_merchant_account\" >How do I create a merchant account? How hard is it to get a merchant account?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-36\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Is_Merchant_Account_same_as_Bank_Account_How_much_does_it_cost_to_set_up_a_merchant_account\" >Is Merchant Account same as Bank Account? How much does it cost to set up a merchant account?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-37\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#What_is_the_difference_between_a_payment_processor_and_a_payment_gateway\" >What is the difference between a payment processor and a payment gateway?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-38\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Can_I_have_multiple_merchant_accounts\" >Can I have multiple merchant accounts?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-39\" href=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/#Can_I_have_multiple_payment_gateways\" >Can I have multiple payment gateways?<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n\n<p class=\"wp-block-paragraph\"><em>Want to know all about payment gateway vs merchant account? Here&#8217;s a guide covering their differences, how they work and why they are important to your business.<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Before we start with the blog, here\u2019s a simple equation for you to remember:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Payment Gateway (PG) + Merchant Account by Payment Aggregator (PA) = Accept Online Payments<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Trust us. By the end of this section, it will all fall into place.&nbsp;<\/p>\n\n\n\n<div data-tf-widget=\"XeMDdnT8\" data-tf-iframe-props=\"title=Are You a Payments Gateway Expert?\" data-tf-medium=\"snippet\" style=\"width:100%;height:400px;\"><\/div><script src=\"\/\/embed.typeform.com\/next\/embed.js\"><\/script>\n\n\n\n<p class=\"wp-block-paragraph\">But first, let\u2019s understand the basic concepts with a <strong>simple analogy<\/strong>.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Payment_Gateway_vs_Merchant_Account_An_Analogy\"><\/span>Payment Gateway vs Merchant Account: An Analogy<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s say that you have moved into a new house and want to get the water supply running. Now, one way would be to set up a water purifier plant and connect it to your house. Evidently, it will cost a lot of money. Another option is to avail services of a water supply company. As a company, they have rented several water purifier plants. They will supply the water into your own home water tank. You would just have to pay according to your consumption.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img data-recalc-dims=\"1\" fetchpriority=\"high\" decoding=\"async\" width=\"770\" height=\"403\" data-attachment-id=\"3721\" data-permalink=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/pg-01\/\" data-orig-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-01.png?fit=5001%2C2618&amp;ssl=1\" data-orig-size=\"5001,2618\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"PG-01\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-01.png?fit=770%2C403&amp;ssl=1\" src=\"https:\/\/i0.wp.com\/cashfree.com\/blog\/wp-content\/uploads\/2021\/06\/PG-01-1024x536.png?resize=770%2C403&#038;ssl=1\" alt=\"Payment Gateway vs Merchant Account\" class=\"wp-image-3721\" srcset=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-01.png?resize=1024%2C536&amp;ssl=1 1024w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-01.png?resize=300%2C157&amp;ssl=1 300w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-01.png?resize=768%2C402&amp;ssl=1 768w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-01.png?resize=1536%2C804&amp;ssl=1 1536w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-01.png?w=2310&amp;ssl=1 2310w\" sizes=\"(max-width: 770px) 100vw, 770px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">This is exactly how a merchant account and payment gateway works. You avail services from a <strong>payment aggregator (water supply company in this analogy<\/strong>). They supply water into your own personal <strong>water tanker (i.e. your merchant account<\/strong>). You just have to pay for your own water consumption (i.e. the MDR on your business transaction). The <strong>Water Purifier is analogous to a payment gateway<\/strong> as it is the technology making it all possible.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Having said that, let\u2019s dive deeper.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Payment_Gateway_vs_Merchant_Account_The_Basics\"><\/span>Payment Gateway vs Merchant Account: The Basics<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The<strong> merchant account is a business bank account <\/strong>that allows businesses to accept payments from customers. It can be provided by a <a href=\"https:\/\/cashfree.com\/blog\/payment-aggregator\/?utm_source=Difference_pg_merchantaccount&amp;utm_medium=blog\">payment aggregator<\/a> (PA) where the PA receives funds on behalf of the merchant in its own account. Thereafter, these funds are forwarded to the merchant\u2019s bank account. This is known as the settlement of funds. Usually, the settlement takes T+2 days but instant settlements can let the merchants access funds in under 15 minutes.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><a href=\"https:\/\/blogrevamp.cashfree.com\/instant-settlements?utm_source=Difference_pg_merchantaccount&amp;utm_medium=blog\"><img data-recalc-dims=\"1\" decoding=\"async\" width=\"770\" height=\"403\" data-attachment-id=\"3722\" data-permalink=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/pg-02\/\" data-orig-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-02.png?fit=5001%2C2618&amp;ssl=1\" data-orig-size=\"5001,2618\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"PG-02\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-02.png?fit=770%2C403&amp;ssl=1\" src=\"https:\/\/i0.wp.com\/cashfree.com\/blog\/wp-content\/uploads\/2021\/06\/PG-02-1024x536.png?resize=770%2C403&#038;ssl=1\" alt=\"Payment Gateway vs Merchant Account\" class=\"wp-image-3722\" srcset=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-02.png?resize=1024%2C536&amp;ssl=1 1024w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-02.png?resize=300%2C157&amp;ssl=1 300w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-02.png?resize=768%2C402&amp;ssl=1 768w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-02.png?resize=1536%2C804&amp;ssl=1 1536w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-02.png?w=2310&amp;ssl=1 2310w\" sizes=\"(max-width: 770px) 100vw, 770px\" \/><\/a><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">On the other hand, <strong>payment gateways are technology providers<\/strong> that facilitate and route the online payment of businesses. It captures the payment data of the customer on the checkout page and forwards it to the acquiring bank. This data is forwarded securely in an encrypted format. Thereafter, it informs the customer if the payment has been accepted or declined.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Now, let\u2019s come back to the equation we discussed.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Payment gateway will provide you with the secure technology to route the online payment. The payment aggregator will allow you to accept the payments through the merchant account. All this without creating a separate payment integration system. Together, these two are all you need to accept online payment. The PA partners with banks, card networks and other payment services providers making online payment possible.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, PAs are not the only ones who can provide a merchant account.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In this blog, we will be focusing on two concepts: payment gateway vs merchant account. and how they can help your business. Now, both payment gateway and merchant account are of two types. Let&#8217;s dig deeper to understand the difference.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Trust us, you&#8217;ll know just why we pit payment gateway vs merchant account!<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_do_Merchant_Accounts_Work_What_are_the_Types_of_Merchant_Account\"><\/span>How do Merchant Accounts Work? What are the Types of Merchant Account?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">There are two ways of getting a merchant account. First, as we have mentioned before, is through a payment aggregator. Another way is through an acquiring bank directly (ISO merchant account).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here\u2019s a <strong>simple analogy<\/strong> to help you out.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s say you are planning to create an office space for your business. So, you decide to build an <strong>office building <\/strong>from scratch<strong>.<\/strong> However, that requires resources for architecture, labour and a lot of other expenses. This proves to be expensive for you. So instead, you and your company decide to work from a <strong>co-working space<\/strong>. You get a dedicated office space that fits your needs.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Believe it or not, this is exactly how merchant accounts work. <strong>The office building is like an ISO merchant account.<\/strong> You can customize your merchant account, much like choosing the architecture of the building. However, it is expensive and requires more resources. <strong>On the other hand, the PA merchant account is like a co-working space.<\/strong> You\u2019d have your unique sub-merchant account, much like your reserved office space. It\u2019ll be pocket friendly for you as you just pay for your space and not the entire building. Similarly, in a PA merchant account, you just pay MDR charges on your own transactions.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Having said that, let\u2019s understand this in detail.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img data-recalc-dims=\"1\" decoding=\"async\" width=\"770\" height=\"770\" data-attachment-id=\"3728\" data-permalink=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/pg-03-1\/\" data-orig-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-03-1.png?fit=5001%2C5001&amp;ssl=1\" data-orig-size=\"5001,5001\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"PG-03-1\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-03-1.png?fit=770%2C770&amp;ssl=1\" src=\"https:\/\/i0.wp.com\/cashfree.com\/blog\/wp-content\/uploads\/2021\/06\/PG-03-1-1024x1024.png?resize=770%2C770&#038;ssl=1\" alt=\"Payment Gateway vs Merchant Account\" class=\"wp-image-3728\" srcset=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-03-1.png?resize=1024%2C1024&amp;ssl=1 1024w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-03-1.png?resize=300%2C300&amp;ssl=1 300w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-03-1.png?resize=150%2C150&amp;ssl=1 150w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-03-1.png?resize=768%2C768&amp;ssl=1 768w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-03-1.png?resize=1536%2C1536&amp;ssl=1 1536w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-03-1.png?w=2310&amp;ssl=1 2310w\" sizes=\"(max-width: 770px) 100vw, 770px\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Payment_Aggregator_Merchant_Account\"><\/span>Payment Aggregator Merchant Account<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">If you integrate with a payment aggregator, they will provide you with a merchant account. The funds will come directly into the PA\u2019s account. Thereafter, they will be settled in your account after a stipulated time period.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Basically, The PA has a master merchant account. All the businesses integrated with the PA become its <strong>sub-merchants<\/strong>. The PA pools the money received by businesses of all these customers. Thereafter, they settle the respective funds in each business\u2019s sub-merchant account.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Best Suited For:<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">PA merchant accounts are best suited for<strong> small and medium businesses<\/strong>. They have zero to no setup fees. In fact, some PA offer merchant accounts zero maintenance fees and no infrastructure costs. The merchants only need to pay charges according to the <a href=\"https:\/\/blogrevamp.cashfree.com\/resources\/merchant-discount-rate?utm_source=Difference_pg_merchantaccount&amp;utm_medium=blog\">merchant discount rate<\/a> on their transactions. This MDR may vary according to the payment modes.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Independent_Sales_Organizations_ISO_Merchant_Account\"><\/span>Independent Sales Organizations (ISO) Merchant Account<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Here\u2019s a question that might have crossed your mind.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Can you get a merchant account without a payment aggregator?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>The answer is Yes. <\/strong>A Bank can issue a merchant account directly to the merchant. However, these banks have to be \u201cassociation member banks\u201d. This means they should be able to accept transactions from card networks like Mastercard or Visa.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Independent Sales Organization (ISO) merchant account is uniquely created for one specific merchant. Evidently, this gives them the freedom to customize their merchant account according to their needs. They operate independently and set their own processing rates. Moreover, they can get features like dynamic currency conversion.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, <strong>getting an ISO merchant account from scratch is a major task<\/strong>. First, you\u2019d need to have partnerships with association member banks. This would require an immense amount of resources in due diligence and legal agreements. Next, you\u2019d need to offer various payment methods and modes to your customer. For instance, recurring billing or one-time payment.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To save their time and resources, most merchants choose to integrate with a payment aggregator. It has pre-existing agreements with banks and provides merchant accounts to businesses quickly and efficiently.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Best Suited For:<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">ISO merchant accounts are best suited for<strong> large corporations<\/strong>. In fact, they are the only ones who would qualify for it. Businesses have to cross a certain level of transactions to cross the threshold to get an ISO merchant account. These thresholds are created by card networks like American Express, Mastercard and Visa.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Now that we have covered the types of merchant account. Let\u2019s move onto the types of payment gateways.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Types_of_Payment_Gateway\"><\/span>What are the Types of Payment Gateway?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Payment gateways were mainly provided by banks in the past. However, recently fintech firms have entered the scene. They provide user-friendly ways of accepting payments and boast of higher success rates as well.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"770\" height=\"172\" data-attachment-id=\"3731\" data-permalink=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/pg-04-1\/\" data-orig-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-04-1.png?fit=5001%2C1118&amp;ssl=1\" data-orig-size=\"5001,1118\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"PG-04-1\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-04-1.png?fit=770%2C172&amp;ssl=1\" src=\"https:\/\/i0.wp.com\/cashfree.com\/blog\/wp-content\/uploads\/2021\/06\/PG-04-1-1024x229.png?resize=770%2C172&#038;ssl=1\" alt=\"Payment Gateway vs Merchant Account\" class=\"wp-image-3731\" srcset=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-04-1.png?resize=1024%2C229&amp;ssl=1 1024w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-04-1.png?resize=300%2C67&amp;ssl=1 300w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-04-1.png?resize=768%2C172&amp;ssl=1 768w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-04-1.png?resize=1536%2C343&amp;ssl=1 1536w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-04-1.png?w=2310&amp;ssl=1 2310w\" sizes=\"(max-width: 770px) 100vw, 770px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s understand why third party payment gateways are overshadowing bank payment gateways.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Payment_Gateways_by_Third_Parties\"><\/span>Payment Gateways by Third Parties<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Third party PGs are basically fintech firms that are taking over the market with their unique products. They offer Hosted as well as Self Hosted PGs to businesses. Moreover, They allow <strong>easy integration<\/strong> and plugins for all major eCommerce platforms. For instance, Shopify and WooCommerce.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">One of the reasons why businesses gravitate toward third party PGs is their <strong>innovative payment products<\/strong>. For example, Cashfree helps merchants accept payments through UPI and payment links apart from cards, net banking and wallet. Their payment products like instant settlements, bank account verification and instant settlement is another example. Interestingly, despite proving to be a better alternative, their <a href=\"https:\/\/blogrevamp.cashfree.com\/payment-gateway-charges?utm_source=Difference_pg_merchantaccount&amp;utm_medium=blog\">payment gateway charges<\/a> may be lower.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Recent research shows that <a href=\"https:\/\/www.mckinsey.com\/industries\/financial-services\/our-insights\/how-us-customers-attitudes-to-fintech-are-shifting-during-the-pandemic\" rel=\"nofollow\">customers are losing trust in traditional banks<\/a> and their services. Third party PGs have leveraged their tech-savviness and superior customer service to fill that void.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><a href=\"https:\/\/merchant.cashfree.com\/merchants\/signup?utm_source=Difference_pg_merchantaccount&amp;utm_medium=blog\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"770\" height=\"129\" data-attachment-id=\"3737\" data-permalink=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/pa-trynow-3\/\" data-orig-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PA-TryNow.png?fit=1200%2C200&amp;ssl=1\" data-orig-size=\"1200,200\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"PA-TryNow\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PA-TryNow.png?fit=770%2C129&amp;ssl=1\" src=\"https:\/\/i0.wp.com\/cashfree.com\/blog\/wp-content\/uploads\/2021\/06\/PA-TryNow-1024x171.png?resize=770%2C129&#038;ssl=1\" alt=\"\" class=\"wp-image-3737\" srcset=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PA-TryNow.png?resize=1024%2C171&amp;ssl=1 1024w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PA-TryNow.png?resize=300%2C50&amp;ssl=1 300w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PA-TryNow.png?resize=768%2C128&amp;ssl=1 768w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PA-TryNow.png?w=1200&amp;ssl=1 1200w\" sizes=\"(max-width: 770px) 100vw, 770px\" \/><\/a><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Payment_Gateways_by_Banks\"><\/span>Payment Gateways by Banks<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Bank payment gateways are usually preferred by large corporations. The reason is that it is extremely hard to integrate into them. Moreover, their dashboards might not show real-time transaction status. This is in stark comparison to the third party PGs.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Furthermore, some of them have outdated systems that are not compatible with modern browsers. This decreases their user-friendliness and most of them require manual configuration.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Pro Tip:<\/strong> <a href=\"https:\/\/cashfree.com\/blog\/types-of-payment-gateway\/?utm_source=Difference_pg_merchantaccount&amp;utm_medium=blog\">Types of Payment Gateway<\/a>: Ultimate Guide<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Now, that we are done with the types of merchant accounts and payment gateways, it\u2019s only natural to ask: how do they work!&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Payment_Gateway_vs_Merchant_Account_How_Do_They_Work\"><\/span>Payment Gateway vs Merchant Account: How Do They Work?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">We will be explaining how PG and merchant account help in accepting online payments. But first, we need to know the two other players involved.&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>The Acquiring Bank:<\/strong> The Acquiring Bank aka the Acquirer is the bank that holds the merchant account. It accepts online payments from the issuing bank. Moreover, It ensures that the merchant is operating under the regulations of card networks.&nbsp;<\/li>\n\n\n\n<li><strong>The Issuing Bank: <\/strong>This is the bank that has issued the customer\u2019s credit\/debit card. It validates the card at the time of online payment.<\/li>\n\n\n\n<li><strong>Payment Processor: <\/strong>The payment processor is the technology responsible for online transactions. It acts as a bridge between the PG and the credit and debit card companies.<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">Now, let\u2019s get to the step by step process of how a merchant can accept online payments.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"770\" height=\"770\" data-attachment-id=\"3899\" data-permalink=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/pg-05-2\/\" data-orig-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/08\/PG-05.png?fit=5001%2C5001&amp;ssl=1\" data-orig-size=\"5001,5001\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"PG-05\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/08\/PG-05.png?fit=770%2C770&amp;ssl=1\" src=\"https:\/\/i0.wp.com\/cashfree.com\/blog\/wp-content\/uploads\/2021\/08\/PG-05-1024x1024.png?resize=770%2C770&#038;ssl=1\" alt=\"\" class=\"wp-image-3899\" srcset=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/08\/PG-05.png?resize=1024%2C1024&amp;ssl=1 1024w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/08\/PG-05.png?resize=300%2C300&amp;ssl=1 300w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/08\/PG-05.png?resize=150%2C150&amp;ssl=1 150w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/08\/PG-05.png?resize=768%2C768&amp;ssl=1 768w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/08\/PG-05.png?resize=1536%2C1536&amp;ssl=1 1536w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/08\/PG-05.png?w=2310&amp;ssl=1 2310w\" sizes=\"(max-width: 770px) 100vw, 770px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_a_Merchant_Account_Payment_Processing\"><\/span><strong>What is a Merchant Account Payment Processing?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Customer_Enters_Card_Details\"><\/span>Customer Enters Card Details<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">First, the customer chooses a product from the merchant\u2019s website and heads to the checkout. Now, the merchant may be using a <a href=\"https:\/\/cashfree.com\/blog\/hosted-payment-gateway\/?utm_source=Difference_pg_merchantaccount&amp;utm_medium=blog\">hosted payment gateway<\/a> or non-hosted PG. Either way, the customer fills in their card details. This includes the card\u2019s number, expiration date, CVV and cardholder\u2019s name.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Payment_Gateway_Encrypts_Data\"><\/span>Payment Gateway Encrypts Data<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The PG captures this information and performs <a href=\"https:\/\/cashfree.com\/blog\/tokenization-rbi\/?utm_source=Difference_pg_merchantaccount&amp;utm_medium=blog\">tokenization<\/a>. This means that it replaces sensitive card details with a series of characters. These characters are referred to as a token. Thereafter, the PG performs a fraud-check and sends the data to the Acquirer.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Acquirer_Sends_Info_to_Card_Network\"><\/span>Acquirer Sends Info to Card Network<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Next, the <a href=\"https:\/\/cashfree.com\/blog\/third-party-payment-processor\/?utm_source=Difference_pg_merchantaccount&amp;utm_medium=blog\"><strong>third party payment processor<\/strong><\/a> sends the information from the acquirer to the respective card networks. For instance, Visa and Mastercard. The Card network performs another round of fraud check and forwards the data to the correct Issuing Bank via the processor.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Issuing_Bank_Authorises_Transaction\"><\/span>Issuing Bank Authorises Transaction<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The issuing bank authorizes the transaction. It sends the information of approval or decline of payment to the card network via a payment processor. Thereafter, the same payment processor forwards the message from the card network to the acquirer, and then the PG. Finally, the PG forwards this message to the merchant.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Money_Held_in_Merchant_Account\"><\/span>Money Held in Merchant Account<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">If the transaction is approved, the Acquirer requests the funds from the Issuer. <strong>These funds are kept in the merchant account provided by the PA. <\/strong>The funds may be settled in the merchant\u2019s account in T+2 days. Alternatively, the PA might offer instant settlements that may take as few as 15 minutes.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Payment_Gateway_Informs_Customer\"><\/span>Payment Gateway Informs Customer<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The payment gateway informs the customer of the approval or denial of payment. The merchant\u2019s payment page may ask for an alternative mode of payment if the payment is declined.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Phew! Yes, we know that was a lot of information. However, not nearly enough.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">While we are comparing payment gateway vs merchant account, there is one important aspect we must take into consideration. It is important to understand how you can choose a payment gateway and merchant account provider. So, let\u2019s head to that section without wasting any time.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_To_Choose_a_Payment_Gateway\"><\/span>How To Choose a Payment Gateway<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Choosing a payment gateway may seem like a daunting task. After all, the safety of your customers\u2019 card information and your reputation is at stake.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So, here\u2019s a checklist you can keep handy while choosing a payment gateway for your business.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"770\" height=\"403\" data-attachment-id=\"3734\" data-permalink=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/pg-06-1\/\" data-orig-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-06-1.png?fit=5001%2C2617&amp;ssl=1\" data-orig-size=\"5001,2617\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"PG-06-1\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-06-1.png?fit=770%2C403&amp;ssl=1\" src=\"https:\/\/i0.wp.com\/cashfree.com\/blog\/wp-content\/uploads\/2021\/06\/PG-06-1-1024x536.png?resize=770%2C403&#038;ssl=1\" alt=\"Payment Gateway vs Merchant Account\" class=\"wp-image-3734\" srcset=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-06-1.png?resize=1024%2C536&amp;ssl=1 1024w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-06-1.png?resize=300%2C157&amp;ssl=1 300w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-06-1.png?resize=768%2C402&amp;ssl=1 768w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-06-1.png?resize=1536%2C804&amp;ssl=1 1536w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-06-1.png?w=2310&amp;ssl=1 2310w\" sizes=\"(max-width: 770px) 100vw, 770px\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Security\"><\/span>Security<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/www.chargebee.com\/resources\/guides\/credit-card-processing-statistics\/\" rel=\"nofollow\">7 out of 10 customers<\/a> make shopping decision based on which payment methods is the most secure. Moreover, <a href=\"https:\/\/sleeknote.com\/blog\/cart-abandonment-statistics\" rel=\"nofollow\">17% of customers<\/a> choose to abandon the cart if they don\u2019t trust the site.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Integrating with a credible and trustworthy PG is imminent for your business. So, ensure that your PG is Payment Application-Data Security Standard <strong>(PA-DSS) <\/strong>and Payment Card Industry-Data Security Standard <strong>(PCI-DSS)<\/strong> compliant.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Furthermore, certain PGs take extra measures towards security through risk mitigation efforts. This ensures water-tight security of their database. For instance, Cashfree has a built-in <strong>Risk Management System<\/strong> developed in cooperation with Paypal.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Payment_Modes_and_Methods\"><\/span>Payment Modes and Methods<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Did you know that <a href=\"https:\/\/baymard.com\/lists\/cart-abandonment-rate\" rel=\"nofollow\">7% of customers<\/a> would abandon the cart if there aren\u2019t enough payment methods? That\u2019s a precious bottom of the funnel lead a business cannot afford to lose.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Try to choose a PG that can provide you with multiple payment modes. For instance, cards, net banking, UPI, wallets, PayLater, etc.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Furthermore, ensure that the PG allows you to offer various payment methods. This can range from recurring billing to EMI to a one-time payment.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"International_Payment_Options\"><\/span>International Payment Options<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Global eCommerce sales are expected to <a href=\"https:\/\/amasty.com\/blog\/wp-content\/uploads\/2021\/02\/GLOBAL-E-COMMERCE-TRENDS-AND-STATISTICS.pdf\" rel=\"nofollow\">grow by 20% in 2021<\/a>. Expanding your business beyond the home country can help you boost sales and increase your customer base. However, a lot of PGs try to impose hefty setup fees and security deposits for international payments.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Customers prefer to pay the upfront cost in their local currency. So, try to opt for a PG that can help you accept international payments seamlessly. Moreover, ensure that the PG provides the facility to convert the currency to INR for your convenience.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Hosted_and_Self_Hosted_PG_Options\"><\/span>Hosted and Self Hosted PG Options<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">A Hosted PG is when the customer is directed to the PG\u2019s website for the transaction. After the payment, they are directed back to the merchant\u2019s site. On the other hand, a Self Hosted PG allows customers to stay on the merchant\u2019s website for the transaction.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A Hosted PG is easier to set up and has the advantage of customer familiarity. However, self-hosted PG allows the merchant to control the user experience until the successful payment. Now, <a href=\"https:\/\/uxcam.com\/blog\/ux-statistics\/\" rel=\"nofollow\"><strong>88% of users<\/strong><\/a><strong> don\u2019t return to a site after a bad user experience<\/strong>. So, it is definitely an important factor in deciding your sales.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As a result, it is advisable to choose a PG provider that provides both hosted and non hosted PG. Furthermore, try to look for a provider that provides smooth payment flow in hosted PG.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"PG_Costs\"><\/span>PG Costs<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The cost of payment gateway mainly consists of 3 variables:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>1) Setup Fee: <\/strong>This is a one-time fee that includes integration and infrastructure costs<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>2) Annual\/Monthly Maintenance Fees: <\/strong>This is a monthly or yearly fee that includes maintenance charges. It may depend on the PG features that you have opted for or the modes of payments offered.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>3) Transaction Discount Rate (TDR): <\/strong>The PG applies a<strong> <\/strong>TDR or Merchant Discount Rate (MDR) is applied on every transaction it processes for your business. The MDR may differ from one PG to another. Moreover, it may differ from one payment mode to another. For example, UPI to net banking or wallet payments.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A lot of providers offer low payment gateway charges and no maintenance or setup fee. Try to look for a PG with competitive pricing.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Ease_of_Integration\"><\/span>Ease of Integration<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Ease of integration set the third party PGs apart from their bank counterparts. Try to go for a PG that had easily available integration kits. Most PGs have ready to use <strong>plugins for major eCommerce shops<\/strong> like Magento, WooCommerce, Shopify etc.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Moreover, you will find SDKs for <strong>mobile app integrations<\/strong> as well. For instance, Android, iOS, React Native etc. Furthermore, look for PGs that have <strong>detailed integration guides <\/strong>in all popular computer languages like Java and C++. This will aid your developers and your business in the long run.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Customer_Support\"><\/span>Customer Support<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Customer support can really make or break your business. Especially, when it comes to payments. In fact, <a href=\"https:\/\/blog.hubspot.com\/service\/customer-service-stats\" rel=\"nofollow\">89% of users<\/a> repeat sales after a positive customer experience.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So, ensure that your PG provides reliable and quick customer support. It would be better to have a dedicated account manager from the provider for better context. Moreover, live chats, emails support and a 24&#215;7 helpline can be a big plus.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Transaction_Analytics\"><\/span>Transaction Analytics<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Try to go for a PG that can provide you with detailed analytics of your transactions. This will allow you to get your hands on a lot of insights. In turn, you can <strong>mould these insights into marketing tactics<\/strong>.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For instance, your PG will help you understand at what times of the year your sales are at peak. Moreover, it will inform you of the most preferred payment methods and distribution of customers across platforms. (iOS or Android etc.) After getting this information, you can make targeted marketing efforts to boost your sales.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, choosing a payment gateway is only half the task done. Without further ado, let\u2019s move on to the second half.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_To_Choose_a_Merchant_Account\"><\/span>How To Choose a Merchant Account<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Your payment aggregator will provide you with a merchant account. So, the real question is how can you zero in on a PA that suits your needs.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here\u2019s a checklist to help you out.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"770\" height=\"172\" data-attachment-id=\"3735\" data-permalink=\"https:\/\/blogrevamp.cashfree.com\/difference-between-payment-gateway-and-merchant-account\/pg-07-2\/\" data-orig-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-07-2.png?fit=5001%2C1118&amp;ssl=1\" data-orig-size=\"5001,1118\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"PG-07-2\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-07-2.png?fit=770%2C172&amp;ssl=1\" src=\"https:\/\/i0.wp.com\/cashfree.com\/blog\/wp-content\/uploads\/2021\/06\/PG-07-2-1024x229.png?resize=770%2C172&#038;ssl=1\" alt=\"\" class=\"wp-image-3735\" srcset=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-07-2.png?resize=1024%2C229&amp;ssl=1 1024w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-07-2.png?resize=300%2C67&amp;ssl=1 300w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-07-2.png?resize=768%2C172&amp;ssl=1 768w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-07-2.png?resize=1536%2C343&amp;ssl=1 1536w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/06\/PG-07-2.png?w=2310&amp;ssl=1 2310w\" sizes=\"(max-width: 770px) 100vw, 770px\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Security-2\"><\/span>Security<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Any fraud or data breach of your customer\u2019s information can lead to serious consequences. It will not only reduce customer trust but also lead to legal actions. For instance, punitive damages and out of pocket expenses. Moreover, it might take a toll on your business finances due to litigation fees.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Just like your PG, your merchant account provider must be PCI-DSS compliant. Moreover, they should have a fraud and risk management system in place.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Scalability\"><\/span>Scalability<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">As a small or medium business, your growth might be unpredictable. Ensure that your merchant account provider is scalable and adept at handling growing businesses. Check if their existing clients are of the same scale and growth pattern as yours.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As daunting as it may seem, choosing a PG and merchant account provider isn\u2019t that hard. As a merchant, you have to ensure that these providers meet your business requirements. Moreover, ensure that they are scalable and trusted as a brand in the market.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Interestingly,<strong> you can choose a PA or merchant account provider that is also a PG<\/strong>. Some payment service providers provide both services as products. Look for such PSPs in your geography for a smoother experience.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We hope that this blog cleared up the concept of payment gateway vs merchant account. Let&#8217;s have a quick look at some related questions.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs_on_Payment_Gateway_vs_Merchant_Account\"><\/span>FAQs on Payment Gateway vs Merchant Account<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Merchant_in_online_payment\"><\/span>What is Merchant in online payment?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Usually, the term \u2018merchant\u2019 is used to refer to the enterprise\/business that is offering products to customers and receiving funds in return. Merchants integrate with payment gateway and have a separate business bank account called the \u2018merchant account\u2019.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Is_Merchant_Account_the_same_as_Payment_Processor\"><\/span>Is Merchant Account the same as Payment Processor?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">A merchant account is like a business bank account for an organization or enterprise. After the customer pays for the product or service, the payment gateway (PG)&nbsp; credits the funds into the merchant account after deducting the PG charges.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">On the other hand, a payment processor helps communicate the payment information between the card companies to Acquirer and Issuing Banks. The payment processor is extremely important as essential for online payment processing.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_use_of_Payment_Gateway_How_do_payment_gateways_work_technically\"><\/span>What is the use of Payment Gateway? How do payment gateways work technically?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">We have already explained how a payment gateway works in our previous section. However, here are some points that explain the use of a payment gateway:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>1. Provides Merchant IDs-<\/strong> A we discussed before, a payment gateway is responsible for providing a merchant account to businesses. These merchants are allotted sub-merchant IDs. Thereafter, it helps in merchant payment configuration by communicating with the payment switch. The PG uses this ID to validate the transactions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>2. Defines Payment Limit- <\/strong>The payment gateway defines the maximum amount of transactions the merchant can do in one day. Moreover, it might restrict transactions from a credit card that is issued in one particular region.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>3. Requests Payment Processors-<\/strong> The payment gateway requests the payment switch or payment processor to process the payment. Thereafter, it conveys the acceptance or denial of payment to the customer.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>4. Provides Payment Analytics and Receipts-<\/strong> The payment gateway sends the payment receipts to the merchants and provides a dashboard to help analyze transactions.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>5. Ensures Payment Security- T<\/strong>he payment gateway employs robust risk management and fraud detection systems. It encrypts and tokenises the customer card details\/other payment details and ensures no financial data is leaked. Moreover, the PG ensures that the cardholder is enrolled in a 3D secure payment structure.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_does_a_payment_gateway_make_money_How_do_I_avoid_payment_gateway_charges\"><\/span>How does a payment gateway make money? How do I avoid payment gateway charges?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">A payment gateway can charge fixed and variable costs from the merchants.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Fixed charges are usually the onboarding fees, infrastructure charges and annual maintenance fees. On the other hand, the variable fees are the merchant discount rate\/transaction discount rate (MDR\/TDR) charges. The MDR may vary according to the payment mode and are charged per transaction.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">There are no ways to avoid payment gateway charges. However, you can choose a payment gateway that charges no annual maintenance fees or setup fees. For instance, Cashfree.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_do_I_receive_money_from_a_merchant_account\"><\/span>How do I receive money from a merchant account?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">The payment gateway automatically credits the funds in your merchant account. This process is known as the <strong>settlement. <\/strong>Now, <strong>settlement may be instant or standard.<\/strong> Standard settlements happen on bank working days and credits the funds in the merchant account in T+2 to 4 days. On the other hand, Instant settlements can happen within 15 days and are not reliant on bank working days.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For more information, head over to this blog on <a href=\"https:\/\/cashfree.com\/blog\/reconciling-your-payment\/?utm_source=Difference_pg_merchantaccount&amp;utm_medium=blog\">reconciling your payment<\/a>.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_do_I_create_a_merchant_account_How_hard_is_it_to_get_a_merchant_account\"><\/span>How do I create a merchant account? How hard is it to get a merchant account?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Like we mentioned before, you can get a merchant account in two ways.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">1. By integrating with a payment gateway<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">2. An ISO merchant account issued directly by the bank<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It is not hard to get a merchant account by integrating with a payment gateway. Especially when they have the business address, bank details and KYC information ready.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, it is hard to get an ISO merchant account as it requires an immense amount of resources and collaboration with banks.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Is_Merchant_Account_same_as_Bank_Account_How_much_does_it_cost_to_set_up_a_merchant_account\"><\/span>Is Merchant Account same as Bank Account? How much does it cost to set up a merchant account?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">A merchant account is a business bank account that is different from a normal bank account.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Many payment gateways, like Cashfree, have zero set up fees and help you set up a sub-merchant account with zero charges.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_difference_between_a_payment_processor_and_a_payment_gateway\"><\/span>What is the difference between a payment processor and a payment gateway?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Think of both the payment processor and PG as mailmen. They both do the same job but in different geographical locations. Allow us to explain.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The payment gateway transmits the customer data to the payment processor. It connects the payment processor to the merchant account and card companies.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">On the other hand, the payment processor transmits the customer\u2019s card information to the issuing and acquiring bank. It handles the customer transaction which makes online payment possible.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For a more detailed answer, head over to this guide on the <a href=\"https:\/\/cashfree.com\/blog\/difference-between-payment-gateway-and-payment-processor\/\">difference between payment gateway and payment processor<\/a>.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Can_I_have_multiple_merchant_accounts\"><\/span>Can I have multiple merchant accounts?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Yes, a lot of merchant account providers will help you open multiple merchant accounts. There can be several reasons for this. Maybe the bank decided to shut down the merchant account due to a change in policies. (Companies in high-risk industries are especially susceptible to this)<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It is also possible that the Acquiring bank has imposed a monthly volume limit.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Multiple merchant accounts can help businesses avoid sudden disruptions of payments.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Can_I_have_multiple_payment_gateways\"><\/span>Can I have multiple payment gateways?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Yes, merchants can have multiple payment gateways on their sites. You can choose to integrate multiple PGs at once. Alternatively, you can integrate multiple PGs but route them selectively. You may route the transactions on the basis of your business needs, the strengths of the particular PG, or downtimes.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Multiple payment gateways can help increase customer trust. Moreover, it can lead to a higher number of successful transactions by balancing the load.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For more information, check out this guide on <a href=\"https:\/\/cashfree.com\/blog\/multiple-payment-gateways\/\">multiple payment gateways<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Want to know all about payment gateway vs merchant account? Here&#8217;s a guide covering their differences, how they work and why they are important to your business. Before we start with the blog, here\u2019s a simple equation for you to remember: Payment Gateway (PG) + Merchant Account by Payment Aggregator (PA) = Accept Online Payments<\/p>\n","protected":false},"author":17,"featured_media":3685,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_themeisle_gutenberg_block_has_review":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_wpcom_ai_launchpad_first_post":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[1470,1374],"class_list":["post-3688","post","type-post","status-publish","format-standard","has-post-thumbnail","category-all","tag-merchant-account","tag-payment-gateway"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Payment Gateway vs Merchant Account - Updated Guide<\/title>\n<meta name=\"description\" content=\"Want to know all about payment gateway vs merchant account? 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