What is a Payment Gateway?A payment gateway is a technology that authorises and transmits payment information between a customer, the business they're buying from, and the bank systems involved. Suppose your business is an online shop, for example. In that case, a payment gateway receives the card information from your customer's card and then encrypts the data, and sends it to the customer's bank for approval. Once the bank approves the transaction a confirmation of the sale is then sent to your business.  In short, a payment gateway ensures a smooth and secure flow of information during online payments. They also come with features to prevent fraud and keep your financial information safe.Who Needs a Payment Gateway?As you've read, a payment gateway facilitates communication between the various systems involved in the online payment process, and so they form an essential part of any digital transaction your business makes.  Whether you have a small online business or a large one with multiple physical shops, every digital payment you accept with go through a payment gateway. Payment Gateways vs Payment ProcessorsThe difference between payment gateways and payment processors is slight but important. A gateway works as a checkpoint; one that makes sure a transaction can happen between your business and the customer concerned. A processor, meanwhile, is responsible for the actual transfer of funds from your customer to your business.  The next part involved is your merchant account, which is where the funds end up once a sale has gone through the previous two stages. After this, the money can then be transferred from your merchant account into your business bank account.  Who Provides Payment Gateways?There are various payment gateway providers that will enable your business to accept digital payments, with many of them offering different methods of doing so. The best payment gateway for your business will likely be one of the three main types of payment gateways, which are:HostedSelf-hostedAPI-hosted

Though the two are often confused with one another, there are several differences between merchant accounts and business accounts. If you're struggling with understanding what sets them apart, this article will help you get a firmer understanding. When you want your business to start accepting card payments, you'll likely need both a merchant account and a business bank account. The two are linked, which leads many to think they're synonymous, but they're not.What is a Merchant Account?When you accept a card payment the bank that issued the customer's card sends the funds from their bank account to your merchant account. The bank that provides you with your merchant account then sends the money from your merchant account to your business bank account.  In simple terms, a merchant account acts as a middleman between your business bank account and the bank account that belongs to the customer making the purchase. Where a business bank account holds your funds, a merchant account's role is to just process them.  What is a Business Bank Account?As you've just read, a business bank account is the final destination of your business's money. The money arrives after first leaving your customer's bank account, being processed by your merchant account, and then being sent from your merchant account to your business bank account. Once the money from a sale ends up in your business bank account, you can then spend it where it's needed. What's the Point of a Merchant Account?While it seems logical to accept payments directly into your business bank account, cutting out the middleman and saving time, it would actually cost time in the long run. Merchant accounts work because the bank that provides them is able to advance you the money you get from sales before the payment is fully completed.  The payment a customer makes to your business has to go through checks at their end before their bank releases the funds, which can take days. So while merchant accounts add an extra step, they mean your business has much quicker access to its funds than it otherwise would.

Getting Started with a Merchant AccountOpening a merchant account allows your business to accept credit and debit card payments from customers. They are, by their nature, helpful for many businesses as they allow them to modernise the way they take payments and interact with their customers.  But how do you get a merchant account? It's a process many businesses do every year but, if you're unfamiliar with the process, it can be confusing and even daunting. That's why we've created a breakdown of the process. Before you Apply for a Merchant AccountIf you want a merchant account, there are a couple of things you need to already have in place before you can apply for one.  First, you need to ensure your business is legally registered. If you're already trading you don't need to worry about this stage but if you're starting from scratch you need to ensure you're registered. There's a lot of information on how to do this on the Government's website but, usually, you'll register as a sole trader, limited company or partnership. When you apply to set up your merchant account, you could be asked to provide a variety of documents to prove your validity, so it's best to have these things ready. Documents you could be asked to provide include: Proof of identity for your business's ownerProof of address for your business's ownerFinancial documentsYour business planStep One: Choose Your Merchant Account TypeThough merchant accounts all work in similar ways, different types of merchant accounts will suit one business more than they will suit another. Retail merchant accounts, for example, are more suited for physical shops where you and your staff will conduct sales face-to-face. These sales will happen with a physical card machine, or perhaps a full EPOS system, which is directly linked to your merchant account.  Internet merchant accounts, meanwhile, do what they say on the tin. They're designed for and suited to businesses that operate online. The payments you make here won't be done face-to-face but via a website. With this type of merchant account, there is no need for a card machine or EPOS system.  Mobile merchant accounts land somewhere in between the two types above. They're ideal for businesses that operate on the go, like pop-up stalls, fitness training providers, or food vans. This type of merchant account allows you to process transactions from anywhere via a mobile device. Only you know the best type of merchant account for your business, so you'll have to take the time to decide which type of account best suits you. Once you've done this, you can move on to the next step. Step Two: Research ProvidersThis is probably the most time-consuming part of the process, but also the most important. You need to research and compare merchant account providers. While all merchant accounts do the same thing and work in broadly the same way, it's still important to not go for the first one you see.  There are plenty of things to consider, not least the transaction fees and admin costs that a merchant account may come with, and the risk level of your industry. To make this step as easy for you as possible, we've created the following list of considerations.