Payment Gateway vs Processor vs Acquirer: Who Does What

A payment gateway, a payment processor and an acquirer each handle a different step of a card payment. The gateway receives the payment from your checkout and passes it on securely. The processor moves the request through the card network. The acquirer is the financial institution that holds the merchant's account and receives the money. In practice one company often provides more than one of these roles.

• Payment gateway: the service between your checkout and the rest of the chain.
• Payment processor: the party that carries the payment request to the card network and back.
• Acquirer: the institution that holds the merchant's account and settles the money to it.
• Issuing bank: the customer's bank, which decides whether to approve the payment.

This guide is the written companion to our short video on the same topic.

What does a payment gateway do?

A payment gateway is the service that takes the card details from your checkout and passes them on securely. It is the first party your payment touches after the customer taps pay. It also sends the answer back, so your checkout can show the customer a result.

A gateway does not hold your money. Its job is to connect your shop to the rest of the payment chain and to report what happened. To see the whole path of one payment, read how a card payment moves.

What does a payment processor do?

A payment processor carries the payment request across the card network and brings the answer back. It talks to the acquirer on one side and, through the card network, to the customer's bank on the other. The processor handles the technical exchange of messages, not your relationship with the customer.

Processors and gateways are different roles, but some providers offer both together, so the two words are sometimes used as if they meant the same thing.

What does an acquirer do?

An acquirer, sometimes called an acquiring bank, is the institution that holds the merchant's account and receives the money from card payments on the merchant's behalf. It is called the acquirer because it acquires the payments from the merchant's side.

The acquirer is the party that sends the payment on to the card network and later settles the money to the merchant. How settlement works, step by step, is covered in authorization, capture and settlement explained.

How do they work together on one payment?

Follow one tapped payment. The customer taps pay at your checkout. The gateway receives the card details and passes them on. The processor carries the request through the card network. The acquirer sends the payment on to the customer's bank, the issuing bank. The issuing bank decides whether to approve it. The answer then travels back the same way to the customer's screen.

If the answer is a refusal, the reason comes back with it. Our guide to why a card payment gets declined explains how to read it.

Why are the roles sometimes bundled?

Some providers combine two or more of these roles in one service to make setup simpler for a merchant. Others keep them separate, which can give a merchant more control but means more agreements. Which setup fits depends on your business and on what your provider offers, so check the terms you are given.

For a business in a higher-risk category, the choice of provider and the review of the application can matter a great deal. EPaySe is a payment gateway in development for high-risk and regulated businesses, reviewed and approved case by case.

FAQ

What is the difference between a payment gateway and a payment processor?

A gateway connects your checkout to the payment chain and passes the card details on securely. A processor carries the payment request across the card network and back. Some providers offer both in one service.

What is an acquirer in simple words?

An acquirer is the institution that holds the merchant's account and receives the money from card payments for the merchant. It also settles that money to the merchant.

Does a gateway hold my money?

No. A gateway passes the payment on and reports the result. The money is settled through the acquirer, on the schedule set out in your agreement.

Which party approves a payment?

The customer's bank, called the issuing bank, makes the approval decision. The other parties pass the request and the answer along.

Do I need to deal with all three separately?

Not always. Some providers bundle roles, so you may sign one agreement that covers more than one step. Check your provider's terms to see who does what in your setup.