Payment gateway vs. shopping cart

If you are creating an online presence to sell your goods or services and are ready to accept credit cards, all of the options, terms, and programs available can be overwhelming. An online payment gateway and a shopping cart are two common components of an eCommerce credit card processing platform — but what's the difference and how do they work together?

Payment gateway – What is it?

Consider a payment gateway to be your company's online point-of-sale terminal. A gateway is most commonly used to authorize payments for an online eCommerce store; however, today's gateway technology allows businesses to accept payments in a brick-and-mortar retail environment using a credit card reader, POS system, or integration with accounting or CRM software.

A payment gateway works as follows:

• Credit card information is swiped, dipped, or manually entered into an online hosted payment form or shopping cart.

• The payment gateway encrypts the credit card information of the customer and sends it to the payment processor.

• The payment processor sends the payment details to the card-issuing bank via the credit card network.

• Based on the available funds, the card-issuing bank approves or rejects the transaction.

• The authorization or decline is communicated back to the payment gateway by the payment processor.

The decision is communicated to the merchant and the customer by the gateway.

What is a shopping cart?

A payment gateway and a shopping cart serve very different purposes. A shopping cart is similar to the grocery cart you use to navigate your local big-box store. You load your items into the cart and drive them to the cash register, which totals your order and gives you the total amount owed.

An online shopping cart does the following:

• It adds up the costs of your items.

• It includes any applicable sales tax and delivery charges.

• It deducts discounts obtained through coupon codes and applicable credits.

• The total amount owed is then displayed.

To complete the payment process, the online shopping cart is linked to a payment gateway, typically via an API.

A hosted payment form is an alternative to a shopping cart integration. This method is ideal for businesses where each transaction typically consists of only one item or charges the same amount on a consistent basis. A secure hosted payment form is designed to look and feel like it belongs on your eCommerce website, but it is hosted on a third-party secure server to help reduce liability and PCI scope.

Why are payment gateways and shopping carts often confused?

It's easy to see how all of this terminology could confuse a business owner. Many aspects of eCommerce and credit card processing interact with one another. They are sometimes integrated as part of an all-in-one solution. Some websites and businesses use these terms interchangeably, adding to the confusion.

So, which do you require? Is the best online payment gateway India required for your company? Is a shopping cart required for your eCommerce site? What about other elements such as a merchant account? Where should you start?

Do you need an eCommerce solution?

We can help you accept payments the way your business requires, from merchant accounts to payment gateways to software integrations. Make an appointment with a payments expert today to learn more.