Payment Gateway vs Payment Processor: What Is the Difference?
A plain-English explanation of two payment terms that are often confused.
Start with the full cost
A gateway generally provides the technology that securely passes payment information, while processing involves handling and routing transactions. Many providers bundle multiple functions together.
Build a like-for-like comparison
Write down your typical monthly sales, average order value, refund rate, payment methods, countries and settlement needs. Then ask each provider for pricing and operational terms against the same assumptions. This makes it easier to see where an apparently simple headline rate does not tell the whole story.
- Percentage and fixed transaction charges
- Monthly or annual platform charges
- Refund and dispute costs
- Currency conversion or cross-border charges
- Settlement timing, reserves and account limits
- Payment methods, integrations and support
Questions worth asking
Ask what happens when a payment fails, a customer requests a refund, a dispute is raised or your sales volume changes. Also confirm how pricing is affected by card type, payment method, currency and customer location.