If you haven’t heard specifically about a gateway account, you can think of it as a credit card terminal, but instead of a physical machine, it’s a program that resides on a webserver. The gateway basically gets the transaction information from your customer to the merchant account bank for processing. It handles the sending and receiving of the financial information including the credit card information and billing information and the subsequent receipt of the approval or denial codes that the bank sends back based on the credit card information.
Most internet merchant accounts have the ability to process a transaction through a virtual terminal. This is done by logging into the gateway website (such as Authorize.Net) and accessing the page that provides this virtual terminal. The merchant or an authorized employee can then input the credit card number, billing information and the amount to be charged and get a real-time authorization that the funds are available. Assuming the product or service is delivered at that time or prior to, the funds can then be “captured” as well. This virtual terminal is a convenient way to process a direct order assuming the transaction information comes over the phone and will provide the merchant an immediate way to capture the sale instead of requiring the customer to go back to the website to input some information and try a checkout process again.
The fees associated with the gateway account are usually based on three components, the setup, the monthly fee, and a per transaction fee. Expect to pay around $25 to $150 for the setup, $5 to $15 for the monthly and anywhere from $.00 to $.10 per transaction for the gateway service. Keep in mind that these fees are usually above and beyond what the merchant account provider will charge you for the merchant account processing fees. Depending on who you use for your merchant account provider, you can usually get a very competitive rate and pricing that includes bundled fees to where your total monthly fee is less than $25 (which is about what the Paypal professional account costs). With this “real” merchant account, you’ll usually be lower on your processing fees as well.
When setting up your merchant account that the gateway is supposed to use, it must be setup on a payment platform or processing platform that is compatible. For instance, Authorize.Net is compatible with about 8 or 9 different payment processors including Vital, First Data, Paymentech, etc. This doesn’t mean you have to worry about which provider you go through as far as the merchant account as most all merchant banks have some platform that is compatible. If the merchant account provider is advertising Authorize.Net as an option, you won’t have to worry about the compatibility. In fact, I don’t know of a single processor that is not compatible with these platforms.
With a gateway account, there are some providers who have an option to process the transactions using a USB reader. What this does is allow the transaction to be processed at a “retail” rate because the card is physically present at the time of the transaction as demonstrated by the fact that the magnetic strip was read instead of just the credit card number. This doesn’t work for all merchants, but if you are doing a good percentage of your transactions live, at tradeshows or a storefront as well as via the internet, this solution may work well for you and save you money in the long run. These readers typically cost around $50 to $70 or so for the basic ones and make sure your gateway company allows this type of transaction. This also means that you setup your account with your provider as a retail account as well, not an internet account. This is the only way you’ll get those lower rates.
There are some instances where you can bypass the gateway altogether and submit transaction information directly to the payment platforms for processing. This is typically reserved for companies that process a LOT of transactions. The reason being is because in order to get to the point where you don’t have to go through a gateway, you’ll need to have your setup audited by some 3rd party auditor that will allow you to go through a certification process to where you can be “verified by Visa” and Mastercard has a similar program I know. This process is not overly difficult, but requires some extensive programming, certification, and of course there is a greater degree of liability as you know maintain the customer transaction information on your server where previously this may have been stored on the servers of the gateway company. There are high fines or fees for any credit card information that is compromised including a fine of up to $10,000 per instance. So, you can see that coding directly to the payment platform has its costs and risks.
In conclusion, the gateway account for most merchants is a valuable component to any ecommerce or online payment processing situation. This is typically very easy to setup and most merchant account service providers can set this up for you at the same time as your merchant account is setup. And, some can even do this for less expensive than if you were to contact your gateway provider directly. This is based on volume discounts that some of the larger providers can get with the gateway companies. This is pretty easy to get setup.
If you enjoyed this article or would like to get even more information about gateway accounts or ecommerce merchant accounts, you can contact me through my Youtube channel or by vising the video I’ve created about online merchant accounts. I hope this article can help you make a more informed decision about accepting credit cards online. Good luck!
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