You may have heard both terms and even used them interchangeably, however, a payment processor is not the same thing as an online payment gateway, although they are both part of the broader category “payment solutions.”
A payment processor moves the funds from source to destination, from the issuing bank to the merchant bank, transmitting all necessary data related to the credit or debit card used in the transaction. Payment processors are also used in traditional retail and they are the only service needed when the customer is shopping with a physical card in a physical store.
In contrast to a payment processor, an online payment gateway also serves to authorize a transaction. It is indispensable in eCommerce transactions, when merchants may also need to accept other payment methods beyond cards.
