Most merchants don't know what a gateway is or at least don't know it by that name. A gateway is a company like Authorize.Net, at least their "gateway" part of their business. This article will tell you what a gateway is and how it is used with most internet merchant accounts. There are some fees associated with every gateway account. They can be used as what's known as a virtual terminal as well and some have the option to process the transactions through a "swiped" process through a USB card reader.
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.
Expect to pay about $25 to $150 for the gateway setup, about $5 to $15 per month for the gateway, and around $.00 to $.10 per transaction. Of course there are some merchant or gateway providers that will give away a gateway setup for free, but as there are setup costs that the merchant provider usually pays, you may still have a higher than normal monthly. So paying something for the setup may reduce your monthly costs and keep them down for the duration of the account. This pricing is usually in addition to the internet merchant account pricing, so make sure that if you are quoted one rate (or both for that matter) that you have the entire picture of what you'll be charged so you aren't left with surprises after you get your first monthly statement.
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.
Getting setup with an internet merchant account typically includes the gateway account as well. The main concerns that you may have is which gateways are compatible with your shopping cart. If you can narrow down this list to your top 2 or 3 gateways, you'll know where to begin your research to compare gateways both cost and features / benefits. If you have questions, you should also have some method in place to contact your internet merchant account provider to ask him or her about your options. This is a relatively easy part of getting setup and should be very straightforward. Good luck in your efforts and best wishes with the success of your business.
Brian Armstrong is a professional merchant account salesperson with over 7 years of industry experience. You can meet Brian through his online videos about www.youtube.com/watch?v=b_tQ6zMjTDM internet merchant accounts, and www.youtube.com/watch?v=sQQXGC3ppRc ecommerce merchant accounts. He is more than happy to answer any questions you may have about both internet merchant accounts and the corresponding gateway account.
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