Apr 29: Payment Gateways and Payment Processors 101

Understanding Online Payments

One of the most important decisions a company makes is how they will accept payments for their goods and services. Inevitably, the company will need to set up some sort of online payment options. For those who have no experience setting up this type of payment servcie, this task can be rather daunting.

In this article, we will examine what a payment processor’s role is, what a payment gateway is, and explain what a merchant account is. We will attempt to demystify al the aspects of online payment systems including their setup and implementation, and finally provide some insight into which method is the best for your business.

What is a Payment Processor?

payment processing drawing for online payments

A payment processor is basically a financial services company that deals with both customers and merchants. The terms “acquirer” and “payment processor” are sometimes used interchangeably, but they have two separate functions. An acquirer is the bank that processes the credit and/or debit card transactions, while a payment processor is the company that communicates in between these banks.  A payment processor acts as the mediator between you and the financial institutions involved in payment transactions.  After the customer has swiped their card, received confirmation from your website, or hung up the phone, both the acquirer and the payment processor each serve a unique function.

Payment processors bring together merchant account providers and payment gateways.  A payment processor takes responsibility for accepting payments from the buyer and connects a payment gateway to a merchant account. A major responsibility of the payment processor is to keep the information that’s passed between a payment gateway and a merchant account secure.  A good payment processor can help recommend payment solutions that work best for your business, such as the most useful credit card processing terminal.   

What is a Payment Gateway?

payment gateway infographic explainer diagram

A payment gateway is a merchant service provided by an e-commerce application service provider that authorizes credit card or direct payments processing for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar.  A payment gateway takes the role of mediator between an online merchant and a payment processor.

The payment gateway collects all the necessary data from customers in order to take payments on a seller’s website. Then, the payment gateway encrypts the customer’s personal details and sends them securely from the seller’s website to a payment processor. This is when the transaction occurs. And finally, the payment processor sends the details of the transaction back to the seller’s website.             

Explaining Merchant Accounts

consumer debit checkout merchant account example

You’ll need a merchant account if you would wish to accept credit cards, debit cards, or any other types of online payments on your website. A merchant account is a type of a bank account that can be connected to a payment gateway. So, a merchant account makes it possible for a seller to receive different types of payments including credit cards, debit cards as well as Apple Pay and Android Pay.

These days, merchant accounts are offered by banks, payment processors and other payment gateway companies.   

Types of Payment Methods

The options are numerous these days when it comes to payment methods available to buyers. Some of the more well-known ways are:

  • Credit card
  • Direct deposit
  • Direct debit
  • Prepaid card
  • Mobile payments
  • Bank Transfers
  • e-Wallets
  • Cryptocurrency
  • …and many more.

Payment Methods in United States


credit cards

Most people have paid for something online using their credit card. Credit cards are one of the world’s most widely accepted form so payment. It’s easy for merchants to accept credit cards by simply installing a bit of software on their computers.


debit cards

Debit cards have become the most common way of paying for items these days. You can withdraw cash from the bank with them or pay at the till with them. Plus, you can use them online as a form of payment too.

If you want to use debit cards for online payment, you’ll need to connect your debit card to your bank account. When ordering a debit card, you must open a chequing account with a bank and deposit funds into it. Once the debit card is used and the payment is made, funds will be deducted from your bank account.

If you have a debit card from VISA or Mastercard, you will be able to make payments in the United States and many other parts of the world.

Another important item to be aware of is that using credit and debit cards allows consumers to build good credit history.     


ach payments illustration

ACH payments are electronic payments that are created when the customer gives an originating institution, corporation, or other customer (originator) authorization to debit directly from the customer's checking or saving account for the purpose of bill payment.

 Customers who choose ACH payment must first authorize you to debit their bank account for the amount due. Authorization must conform to the requirements of the ACH Operating Rules and must be either written and signed, or electronically displayed.

Following are the benefits of ACH Payments

  • Provide your customers with an alternative to credit cards and checks.
  • Offer lower-cost payment than either checks or credit cards.
  • Faster payments than using checks.

ACH payments can be used in many ways. For example, a consumer can take advantage of ACH payments to pay for products and services. An employer can use ACH payments to deposit wages into chequing accounts of their employees. ACH payments are also used by tax payers in order to send funds to the Internal Revenue Service online.   


paypal sign

The idea behind PayPal is simple: Use encryption software to allow people to make financial transfers between computers. That simple idea has turned into one of the world's primary methods of online payment. PayPal is a solution that provides shoppers with several payment options.

Your PayPal card can be linked to a PayPal Cash account, PayPal Cash Plus account, and/or a PayPal Credit account. You can also connect PayPal wallet to your bank accounts, credit cards, and debit cards.


cryptocurrency lifecycle

A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.

Many companies already accept cryptocurrencies (Bitcoin, Litecoin, Ethereum are a few examples). Cryptocurrency’s have their benefits like being able be to prevent fraud, but they have their downsides as well, and many small businesses will have trouble adopting this form of payment.

Payment Methods in Canada

Visa Debit Cards

Visa and Mastercard debit cards are a very popular payment method in Canada and many other countries. Many Canadians choose to use debit cards to shop online, book flights, pay bills, pay for music downloads and many other things as well.

Visa debit cards are connected to the shopper’s bank account. That means that you’ll pay directly from your bank account if you shop online with a Visa debit card. Retailers in Canada accept Visa debit payments online, over the phone and by mail order.   


pay through interac example

Interac e-Transfer is a convenient way to send, request and receive money directly from one bank account to another.

All you need is access to online or mobile banking through a participating financial institution, and you can send or request money to anyone with an email address or mobile phone number and a bank account in Canada.

Online Debit through Curexe



While all the other solutions mentioned are plausible credit card solutions, Curexe has a unique product that's distinguished itself from the rest of the market. Our payment method, Smartpay, can be used as a supplemental payment method alongside Credit Cards, Paypal, etc to help you boost conversions. 

But what exactly is online debit? Think of it as an expedited and secure checkout process. When you create an account with any website there is typically a create an account by logging into Facebook option, it helps fill in necessary data without having to fill out tedious forms but still confirms one's identity. Smartpay has a very similar kind of flow for completing transactions as you connect to your bank account to checkout. Merchants who deploy Smartpay as a supported payment method see increased revenues of up to 12% of their current revenues because of how simple and frictionless it is to complete a purchase without the need of credit or debit cards.

Discuss setting up online debit for your store today



Setting up Online Payments

Best Merchant Processors

In most cases as a merchant setting up your payment processing is so simple that it's just a matter of setting up paperwork. Unless your business is considered high risk, you shouldn't have any trouble getting a merchant account set up. You can read more about the challenges of high-risk merchants here.

  • Stripe

stripe payment gateway

Stripe is a third-party payment processor that provides online businesses with an effective payment processing platform.

Stripe has everything you need to create a subscription service, a marketplace, an online store, digital download sites, etc. Stripe provides online businesses with powerful and flexible development tools, highly customizable API and e-commerce modules. Stripe payment gateway makes it easy to accept credit card payments on sites that sell different types of digital products. It’s feature-rich payment gateway comes with the extension for Easy Digital Downloads and Recurring Payments allowing you to be able to offer subscriptions on your sites.  

-Merchant Fees: 2.9% + 30¢

-Payout Schedule: 7 -10 days after payment is made

  • Moneris

moneris payment gateway

Moneris is a large Canadian financial company that specializes in payment processing services. Moneris is well-known for its customized POS system that allows businesses to accept both onsite and in-store payments easily. Moneris payment gateway also has an extension for Magento. With this extension, the payment gateway can be easily integrated with Magento stores easily and quickly.  

-Payout Schedule: 1 – 2 business days.

-Merchant Fees: 2.65% to Visa, Mastercard, Discover, American Express and JCB credit card transactions

  • Adyen

adyen office

Adyen offers easy, effective and secure online payment solutions to different types of businesses.

With Ayden you’ll be able to accept recurring payments, marketplace payments, in-store payments as well as in-app and mobile payments.   

Ayden WooCommerce Payment Gateway redirects customers to a secure Adyen page where they will be able to make payments.

-Payout Schedule: upon a request

-Merchant Fees: 3.95% + $ 0.12 for credit cards.

  • Braintree

braintree logo

Braintree is a payment processing company owned by PayPal. The company specializes in web and mobile payments, and If you integrate your site with Braintree’s solutions, you’ll be able to accept online payments from PayPal, Venmo, credit and debit cards, digital payments as well as Apple Pay and Google Pay.      

PayPal Powered by Braintree Payment Gateway can be integrated with a WooCommerce store. The gateway allows you to take upfront payments, recurring payments on an online store.   

-Payout Schedule: 2 – 5 business days.

-Merchant Fees: 2.9% + $.30

  • Payfirma

payfirma product

Payfirma provides credit card processing products and services (hardware and software) to different types of businesses. 

Payfirma Opencart Payment Gateway allows businesses to take advantage of Payfirma ecom API for accepting credit card payments.   

-Payout Schedule: 1 – 2 business days.

-Merchant Fees: personalized quotes.

What eCommerce platforms can accept payments right out of the box?

online shopping graphic

If you are looking for the easiest setup in terms of accepting online payments, you are best off building your website on Shopify, Big Commerce, Volusion or Cratejoy. Stripe is already built into their platform which is the biggest and easiest to manage online credit card processing out of any company. This is the easiest way to accept credit card payments without a merchant account per se, but you still technically make an account through whatever platform you use. Even if the sign-up process and information needed is an expedited version of the payment processor on the eCommerce platform.

While that is a straightforward answer there are some cons to going with the easiest solution. You will have limited customization on these platforms, if your business has specific needs for its online checkout, you'll need to get customizations done.

What payment methods should I be offering?

When picking options for making online payments an online retailer must take into consideration customer’s preferences. Your goal is to make the payment process easy for your clients. An online shopper has a large selection of payment options these days.

According to the statistics provided by Statista, shoppers choose to use the following payment methods to pay for products and services online: credit cards (up to 42%), PayPal (up to 39%), debit cards (up to 28%), cash on delivery (up to 23%), bank transfers (up to 20%), gift cards or vouchers (up to 15%), mobile payments (up to 14%) and cryptocurrencies (up to 3%). Obviously, you should aim to offer more payment options to your customers.

This will help you get more payments and increase your sales dramatically!

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