What is a Payment Gateway?
Discussions about payment gateways and merchant accounts are somewhat technical and confusing. However, understanding these things will help you also understand what the fees are to processing payments online.
Generally a payment gateway:
Connects your event website to the credit card networks so you can accept payments onlineSecurely captures the card information from customers.Securely sends the card details to the acquiring bank or processorThe acquiring bank quickly checks the transaction for fraud and risk and then (if appropriate) sends the request to the credit card networks for processing.The credit card approves or denies the transaction and sends the appropriate message back to the shopper and properly handled with your event website.
The process is a loop that looks like this:
Attendee > Event Website > Payment Gateway/Merchant Account > Acquiring Bank > Card Networks > Issuing Bank.
The process is then reversed:
Issuing Bank > Card Networks > Acquiring Bank/Processor > Merchant Account/Gateway > Event Website > Attendee.
The transaction process goes full circle in just a few seconds.
What is a Merchant Account?
A merchant account is a holding account you do not have access to that holds your money for a day to a few days to deposit your funds into your real bank account. This holding period is used to protect the issuing bank against fraudulent charges and refunds. If there are fraudulent transactions or refunds then the issuing bank takes back the funds before it is deposited to your bank account for you to withdraw. You can use the same payment gateway and switch merchant accounts and keep your same bank account.
Payment gateway and merchant account fees in the United States are roughly 2.9% + $0.30 per transaction. Those rates can be negotiated with merchant accounts based on the volume you are processing in a given period. PAYMENT GATEWAY AND MERCHANT ACCOUNT FEES ARE IN ADDITION TO THE COMMISSION FEES YOU ARE PAYING with other platforms like Eventbrite. We like to help people avoid Eventbrite fees.
As a side note: we recommend Stripe which is a combination payment gateway and merchant account.