Understanding Merchant Accounts & Gateways
Webconnex isn't a bank, a gateway or a merchant account. We are the software that makes it all work together. We understand the terminology can get confusing, so we have created a series of steps in understanding all the terms and how they work together.
What's Involved: #1 A Merchant Account. The most common term you will hear is a merchant account. A merchant account is NOT a standard bank account, but a virtual account that acts as a middle man when credit cards and checks are charged online. This account is electronically synced to your bank account and will coordinate the transfer of your online transactions AND directly deposit them into your bank account automatically. The deposits will show in your bank account within 1 to 2 business days. This is separate than a gateway (which is what we will talk about next).
What's Involved #2: A Payment Gateway is like a virtual gatekeeper that determines whether a credit card is valid. It speaks directly with Visa, MasterCard and other bank cards to determine if the card is approved or not. It does this in a fraction of a second. If it is approved, the gateway works with the merchant account to go and retrieve the funds from people’s accounts and get them ready to be deposited into your bank account. Examples of Payment Gateways are Sage, Authorize.net, USAePay, Payments Gateway, etc.
What's Involved #3: Web Software (Webconnex). The gateway orders money back and fourth with Visa / Mastercard, but you need software that creates the registration page where your customers will register for your event. Using Webconnex as your software provider, you create secure web pages that can calculate a registration fees and collect all your attendee's information. Webconnex stores and encrypt's the registrant's information and then sends the money request over to the payment gateway, which tells the credit card companies to transfer money.
Here is how all of it works together....
1) Using our web software, you create a secure online page that can collect donation/registration information and credit card information.
2) The web software calculates the total amount of money needing to be charged and sends this information over to the payment gateway.
3) The payment gateway receives the information and makes sure the credit cards are good. Then it requests Visa / Mastercard to transfer money from the cardholder over to your your merchant account.
4) Each day, your Merchant Account will group together your Visa / Mastercard and other credit card payments and will make a direct deposit into your bank account.
Gateway (also called a Virtual Terminal): a software device that connects an Internet merchant to their processor. It translates between protocols so that computers on the connected networks can exchange transaction data.
Merchant Account: A financial institution or bank account that is used by a merchant specifically for the purpose of collecting proceeds consumer bank account or credit card payment transactions. A Card Present (CP) merchant account is used by merchants that receive payments in a physical location where payment is physically presented to the merchant by the customer at the time of the transaction. A Card Not Present (CNP) merchant account is used by merchants that receive payments electronically or in situations where payment is not physically presented to the merchant by the consumer at the time of the transaction.
Merchant Account Provider: A financial institution, or bank, that provides a financial account to a merchant for the purpose of collecting proceeds from consumer bank account or credit card payment transactions.
You can have a merchant account and not a gateway, but you cannot have a gateway without a merchant account. All internet merchants (CNP) need some sort of gateway.