--- title: "Payment Processor vs. Payment Gateway: What You Need to Know" description: What’s the difference between a payment processor vs. payment gateway? 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How do small, local, and multi-location businesses choose the right solution? ![GoSite](https://www.gosite.com/hubfs/gositelogo.png) GoSite Jun 13, 2020 3 min read ![GoSite](https://www.gosite.com/hubfs/gositelogo.png) GoSite Jun 13, 2020 3 min read ![featured_image](https://www.gosite.com/hubfs/Blog/Images/Payments%20Campaign/Payment%20Processor%20vs.%20Payment%20Gateway%20-%20What%20You%20Need%20to%20Know/Payment-Processor-vs-Payment-Gateway_What-You-Need-to-Know-2.png "Payment-Processor-vs-Payment-Gateway_What-You-Need-to-Know-2") Payments are a’changing. From doubloons to digital wallets, we’ve come a long way. That being said, modern day [payment processing](https://www.gosite.com/payment-processing?hsLang=en-us) can be complicated, particularly where credit cards are concerned. If you’re a business researching for a payment solution, you’ve probably heard the terms “payment processor”  and “payment gateway” come up. Here’s what you need to know about each.  ## **What Is a Payment Processor?** A payment processor is a service that enables you to execute a transaction by passing data through your business, your bank, and your customer’s bank. in other words, it allows you to [accept credit card payments](https://www.gosite.com/blog/how-to-accept-credit-card-payments?hsLang=en-us). In brick-and-mortar shops, you’ve seen these in the form of credit card terminals and POS systems.  (Did you know that many small and local businesses are still using outdated [credit card payment processing solutions](https://www.gosite.com/blog/outdated-credit-card-processing-may-be-bad-for-business?hsLang=en-us), and it could be hurting your business?) Visa introduced the world’s [first credit card terminal in 1979](https://www.adyen.com/blog/how-the-payments-industry-evolved). This switch from paper logistics to electronic communications spread like wildfire in the 1980s, but this evolved with the arrival of the internet. In the mid-nineties, internet-based businesses needed a different kind of payment processor.  New companies sprung up to meet this need by creating consumer-facing tech, and they became known as payment gateways.   ![Payment processor](https://www.gosite.com/hs-fs/hubfs/Blog/Images/Payments%20Campaign/Payment%20Processor%20vs.%20Payment%20Gateway%20-%20What%20You%20Need%20to%20Know/Payment-Processor-vs-Payment-Gateway_What-You-Need-to-Know-1@2x.png?width=2400&name=Payment-Processor-vs-Payment-Gateway_What-You-Need-to-Know-1@2x.png) ## **What Is a Payment Gateway?** Essentially, payment gateways are like virtual payment processors. They allow you to [accept payments online](https://www.gosite.com/blog/how-to-accept-credit-cards-online?hsLang=en-us). So, whereas a payment processor facilitates a credit card transaction, a payment gateway approves (or declines) transactions between you and a customer.  Historically, payment gateways have been used for eCommerce websites but with advancements in [mobile technology ](https://www.gosite.com/blog/this-is-why-you-need-mobile-credit-card-processing?hsLang=en-us)and digital security, the landscape is changing. The [credit card processing industry is seeing a plethora of new digital solutions crop up](https://www.gosite.com/blog/3-trends-in-credit-card-payment-processing?hsLang=en-us), many of them geared toward or compatible with mobile devices.  Digital apps like Venmo and wallets like Apple Pay are creating additional customer convenience and keeping businesses from having to invest in hardware. So what’s right for your business? ![payment processor vs payment gateway](https://www.gosite.com/hs-fs/hubfs/Blog/Images/Payments%20Campaign/Payment%20Processor%20vs.%20Payment%20Gateway%20-%20What%20You%20Need%20to%20Know/Payment-Processor-vs-Payment-Gateway_What-You-Need-to-Know-3.png?width=1200&name=Payment-Processor-vs-Payment-Gateway_What-You-Need-to-Know-3.png) ## **Payment Processor vs. Payment Gateway Pros & Cons ** Now that you better understand payment processors versus payment gateways, you may be wondering which is right for you. There are a few things to take into account: **Payment processor (i.e., terminals and POS systems) pros: ** - Familiar and trusted  **Payment processor cons: ** - Requires hardware (POS system) - Older systems more susceptible to fraud  - Can accept limited forms of payment > * Pssst, see why you should never, ever rent a terminal from [credit card processing companies](https://www.gosite.com/blog/how-credit-card-processing-companies-take-advantage?hsLang=en-us). **Payment gateway pros: ** - Rapid deployment  - Multiple payment options (apps, online, text etc.) - A better, more encompassing customer experience  **Payment gateway cons: ** - Glitches can take a considerable amount of time to troubleshoot - Not everyone is comfortable sharing payment details online - Not all payment gateways allow for card-present transactions If you have an eCommerce site you’re going to need a payment gateway. If you’re strictly brick-and-mortar, you probably just need a payment processor. But what if you don’t want to invest in all the hardware? Fortunately, there are[ contactless payment](https://www.gosite.com/payments?hsLang=en-us) out there that make use of the technology you’re already carrying in your pocket. If you’re interested in seeing how payment processing can be made easy, download our fluff-free, easy-to-read fact sheet. At a glance, you can discover a simpler way of processing payments.  [Improve Cash Flow](https://www.gosite.com/blog/tag/improve-cash-flow) ![Comment](https://www.gosite.com/hubfs/bubbles-chat.svg) 0 Comment ![GoSite](https://www.gosite.com/hubfs/gositelogo.png) GoSite ![GoSite-2-1](https://www.gosite.com/hubfs/Imported%20images/GoSite-2-1.svg) Does Your Business Need a Website? [ GET STARTED ](https://www.gosite.com/getfoundonline?utm_source=Blog720&utm_campaign=Website&hsLang=en-us) ![Group 12 (2) (1) (1)](https://www.gosite.com/hs-fs/hubfs/Group%2012%20(2)%20(1)%20(1).png?width=340&name=Group%2012%20(2)%20(1)%20(1).png "Group 12 (2) (1) (1)") ### Keep Reading [![break even calculator for landscaping businesses](https://www.gosite.com/hubfs/landscaper%20break%20even%20calculator.jpg "break even calculator for landscaping businesses") ](https://www.gosite.com/blog/break-even-calculator-for-landscaping-businesses?hsLang=en-us) [Improve Cash Flow](https://www.gosite.com/blog/tag/improve-cash-flow) ## [Break-Even Calculator for Landscaping Businesses](https://www.gosite.com/blog/break-even-calculator-for-landscaping-businesses?hsLang=en-us) No matter how much you love mowing yards and revitalizing properties, you didn't go into the landscaping business to go ... Aug 09, 2023 3 min read [![Break-Even Calculator for Cleaning Businesses](https://www.gosite.com/hubfs/2023%20Blogs/Break-Even%20Calculator%20for%20Cleaning%20Businesses/Break-Even%20Calculator%20for%20Cleaning%20Businesses.jpg "Break-Even Calculator for Cleaning Businesses") ](https://www.gosite.com/blog/break-even-calculator-for-cleaning-businesses?hsLang=en-us) [Improve Cash Flow](https://www.gosite.com/blog/tag/improve-cash-flow) ## [Break-Even Calculator for Cleaning Businesses](https://www.gosite.com/blog/break-even-calculator-for-cleaning-businesses?hsLang=en-us) Imagine that you've started your own business providing clean and organized spaces. You're working hard and investing ... Jul 12, 2023 3 min read [![Illustration of two cleaners, template and a calculator. ](https://www.gosite.com/hubfs/2023%20Blogs/How%20To%20Build%20Pro%20Forma%20Statements%20for%20Your%20Home%20Services%20Business/How%20To%20Build%20Pro%20Forma%20Statements%20for%20Your%20Home%20Services%20Business.png "Illustration of two cleaners, template and a calculator. ") ](https://www.gosite.com/blog/pro-forma-statements-home-services-business?hsLang=en-us) [Improve Cash Flow](https://www.gosite.com/blog/tag/improve-cash-flow) ## [How To Build Pro Forma Statements for Your Home Services ...](https://www.gosite.com/blog/pro-forma-statements-home-services-business?hsLang=en-us) Jump To... What Are Pro Forma Financial Statements? | Are Home Services Businesses Profitable? | How To Create a Pro ... Jul 10, 2023 3 min read [ VIEW all articles ](https://www.gosite.com/blog)