Merchant Account vs Payment Gateways: Differences Explained!


If you are an E-commerce merchant, having the knowledge about the best payment gateway, different payment processors and merchant accounts is important as they are the very necessities for online transactions.

digital transactions

But for most of the people, these concepts are vague and configuring them out can impact their ventures in a positive manner. They may use the best payment gateway but the real difference between merchant accounts and payment gateways may be still unknown to them.

What Is A Payment Gateway?

In the most basic way, a payment gateway is a tool or technology that allows the merchants to receive online transactions from their customers for their services and also  works to connect all the merchants and the payment networks through digital transactions. You can always choose your best payment gateway among the several gateways available. You can checkout Cashfree payment gateway to get a better idea of the services offered by payment gateways.

What Is a Merchant Account?

This is an account that allows any merchant to process the payments they receive from their customers. All the funds from your business get deposited here and your best payment gateway works to deposit the sum in your merchant account. The funds automatically get transferred to your business bank account from your merchant account at a fixed schedule.

Merchant Account vs Payment Gateways

Here are some of the parameters on which merchant accounts and payment gateways differ. Read ahead to know the exact differences between them.

Account Stability

The possibility of sudden account termination or freezing of your merchant account ranges from minimum to nil. But the account stability of your payment gateway fluctuates depending on your integration with a PSP or merchant account.

Account Approval And Onboarding

When it comes to merchant accounts, merchants have to go through the legal and verification process which can even last for weeks. While when you go for a payment gateway, the process is much faster and easier. You get instant access much before you get your account approved.

Fraud And Risk Management

For merchant accounts, you get personalized fraud filters and ownership of risk management. This ultimately leads to a higher transaction acceptance rate. But payment gateways can also be highly customisable and it totally depends on your service provider


For a merchant account, you have complete independence to integrate with any gateway of your choice. But for a payment gateway, the experience can vary from person to person. It can be easy or difficult and everything depends on the technology.

UX And Conversion

You have complete freedom to optimize your conversions, UX and performance while using merchant accounts. The payment gateway differs depending on if you are integrating with a PSP or any gateway of your choice.

Pricing And Costs

Merchant accounts have flexible costs depending on your business plot and processing capacity. But for payment gateways, the costs like integration and usage can be imposed when using a third-party solution.


For merchant accounts, you get a wholesome support as you get to directly contact an account representative and clarify all your doubts and problems. But that differs for a payment gateway and it depends on whom you are integrating with: a PSP or merchant account.

Terms And Conditions

For merchant accounts, all the terms and conditions are negotiable as it entirely depends on the outlook of your business along with processing capacity. This parameter does not apply for payment gateways.

So as it is evident, the payment gateway and merchant account are two totally different things. Rather, they are complementary to one another as a merchant account needs a payment gateway to process the payment transactions he receives from his customer. The task of a payment gateway, in other words, is to facilitate this transaction in a smooth manner and deposit the sum in the merchant’s account.

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