Merchant Accounts vs. Payment Gateways

By Phillip Parker|March 4, 2026

CPO was created by business owners to help others avoid unethical and expensive merchant account providers. To support the continued operation of this website we sell advertising to ethical... processors who have earned top marks in pricing, support, and business practices. Some of the recommendations found on this website may be paid placements.

Here is the illustration depicting the concept of a Payment Gateway.

What’s The Difference?

A reader emailed recently with a question that is often a point of confusion for many owners. He was confused because his merchant account provider wanted to set him up with an Authorize.net payment gateway to process credit cards through his website. The perplexing issue to him was that he didn’t understand the difference between what his merchant account provider does and what Authorize.net does. To him it seemed like they were the same type of business because both of them let him take credit cards from his customers. But there is a difference between the services these companies provide.

When a business wants to accept credit card through its website, it must have two services:

Merchant Account
“Payment Gateway”

Merchant Accounts and Payment Gateways

A merchant account handles the financial processing of the credit card transaction with the banks and card brands (VISA, MasterCard, etc). A “payment gateway” provides the technology to securely capture and transfer the credit card information from a website shopping cart to the merchant account. Authorize.net is a payment gateway provider, so all that they do is supply technology to capture and transfer credit card transactions to compatible merchant account providers.

Must They Be Separate Providers?

It is very typical to have one company supply the merchant account and another supply the payment gateway because very few companies supply both services under the same roof. Instead, most companies specialize in providing one part of the needed services and then partner with other companies for various other payment-related services that may be needed. When a business needs a service that merchant services company does not provide directly, the company simply sets the customer up with a compatible third-party service provider to supply the needed service.

If you were to buy a physical credit card machine, it would be manufactured by a different company other than the merchant account provider. Though in most cases, the merchant account provider would facilitate the buying or leasing of the equipment. The same practice holds true for internet payment gateways.

This also works the other way around. If you were setting up credit card processing for the first time and contacted Authorize.net, they would set you up with a merchant account provided by a different company and would only directly supply the payment gateway.

Payment Gateways and Online Shopping Carts

Now you might be asking yourself, “Isn’t my website shopping cart a payment gateway?” The answer is “no” (in most cases). A website shopping cart is a piece of software that tracks inventory and allows customers to add items for eventual checkout. A payment gateway fits between your shopping cart and merchant account and is only responsible for the capturing and transferring of credit card data.

Final Thoughts

This all may sound complicated, but most merchant services companies have made the process of setting up these various services to be as seamless as possible. To make it simple, be sure to work with an experienced web designer who is experienced with building e-commerce websites.

For more information on e-commerce payment acceptance be sure to checkout these articles:

About The Author

Phillip Parker

CPO Creator & Founder

Since 2009, I have researched over 1,000 merchant services providers and published hundreds of payment education-related articles. This work has received national recognition, and my expertise in payments is regularly sought by large media outlets such as CNN, MSN, and INC Magazine, among dozens of others.

Shortly after graduating from college, I was recruited into a sales role with a credit card processor. Only later did I realize that the so-called "training" centered on selling expensive processing agreements... layered with hidden fees and long-term contracts. In my earliest transactions, I unknowingly steered friends and family into costly arrangements after they trusted my recommendation. When I fully understood the structure of what I had been selling, I resigned immediately and committed myself to exposing those practices. That commitment became the foundation of this website.

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CardPaymentOptions.com

Established 2009

This website was launched in 2009 as a modest blog dedicated to exposing questionable marketing and pricing practices within the credit card processing industry and how they negatively impact small business owners. What began as a side project has since evolved into a widely recognized platform advocating for transparency, accountability, and ethical standards in merchant services.

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