When the time comes to start taking credit cards, it could be overwhelming to choose from so many different schemes and options. A payment gateway, shopping cart, and virtual terminal are the three typical parts of a credit card processing platform. However, it might be challenging to comprehend how these parts differ from one another and how they might function in tandem.
Join us as we explore what makes each of them unique so you can better determine which solution or combination of solutions best suits your business’s needs.
Understanding payment gateway
Consider a payment gateway as your company’s online point-of-sale system. A gateway is most frequently used to approve payments for an online eCommerce store. But because of advancements in gateway technology, companies may now take payments in a physical retail setting by integrating their POS system, credit card reader, or CRM software.
How does it work?
A payment gateway operates as follows:
- Credit card details are manually typed into an online hosted payment form or shopping cart, or they can be swiped, dipped, or tapped at a terminal.
- Credit card details are encrypted by the payment gateway before being sent to the payment processor.
- The card-issuing bank receives the payment details from the payment processor via the credit card network.
- The availability of funds determines whether the card-issuing bank authorizes or denies the transaction.
- The payment gateway receives notification from the payment processor regarding authorization or decline.
- The gateway communicates the decision to both the customer and the merchant.
What is a virtual terminal?
A virtual terminal is like a computer program that helps you do your work from far away. You can use it to type in numbers and letters, just like you would on a regular computer. It’s handy because you can access it through the Internet, so you don’t need to be at a specific place to use it. People often use virtual terminals for tasks like shopping online, managing their finances, or even talking to others. It’s kind of like having a window into another computer, where you can do stuff without actually being there in person.
Here’s how a virtual terminal works:
- A merchant logs into a payment gateway or online account to access the virtual terminal.
- Credit, debit, or checking account details for each transaction are entered into a form.
- The merchant clicks “Process” to complete the transaction.
No additional hardware or software is required, although a merchant can connect a credit card reader via USB to a desktop or laptop if they so desire.
What is a shopping cart?
A shopping cart is like a virtual basket that you use when shopping online. When you find things you want to buy on a website, you can add them to your shopping cart by clicking a button. It’s just like when you put items into a real shopping cart at a store. The shopping cart keeps track of all the things you want to buy until you’re ready to check out. You can see what’s in your cart anytime, and you can remove things or change the quantities if you need to. When you’re done shopping, you go to the checkout to pay for everything.
Here’s what an online shopping cart does:
- It includes all of your goods’ expenses.
- Delivery costs and any relevant sales tax are added.
- Discounts obtained through promo codes and relevant credits are subtracted.
- After that, the entire amount owed is shown.
A hosted payment form can be used as an alternative to a shopping cart integration. This method works best for companies who charge the same amount every time a transaction is made or usually only include one item. In order to lessen liability and PCI scope, a secure hosted payment form can be created to blend in with the appearance and feel of your eCommerce website while being hosted on a secure third-party server.
Payment gateway vs virtual terminal features
A payment gateway is generally used for eCommerce transactions, which implies it has a customer-facing interface such as a hosted payment form or shopping cart checkout form. This is the main distinction between a payment gateway and a virtual terminal.
Usually, only merchants use virtual terminals. However, if a company has both an online and a physical location, they may use both methods to accept credit cards.
Every solution has benefits of its own. Online credit card, debit card, and ACH payment acceptance are made possible for merchants by a secure payment gateway. Integration with accounting software and other features is also made possible by it.
For both off-site events and mail and phone order sales, a virtual terminal streamlines the payment procedure. It can also help merchants save money without the need for any upfront hardware costs.
Why are payment gateways and shopping carts often confused?
If a business owner is not familiar with technical terminology, it is understandable that they could become confused by its meanings. Credit card processing and eCommerce share many components. They are combined to form an all-in-one solution in some situations. It doesn’t help that some businesses and websites use these names interchangeably. Businesses can identify the best solution for their needs and a better understanding of their differences by using the mentioned overviews.
The right payment processing solution can help your business grow
With Falcon POS’s innovative processing solutions, we can help you accept payments the way your business needs to in order to grow.
Final Words
In conclusion, understanding the differences between a payment gateway, virtual terminal, and shopping cart is crucial for businesses looking to accept credit card payments efficiently. While each serves a distinct purpose, they can work together seamlessly to facilitate online transactions and streamline payment processes. Whether it’s managing eCommerce sales, accepting payments remotely, or providing a user-friendly shopping experience, choosing the right combination of solutions can significantly impact business growth. By grasping these concepts, businesses can make informed decisions to optimize their payment processing systems and better serve their customers.
