Merchant account vs payment gateway

With the digital payments market forecast to grow from USD 111.2 billion in 2023 to nearly USD 194 billion by 2028, businesses everywhere are relying more on electronic transactions to meet customers’ expectations.

Yet, despite this rapid growth, many still find themselves mixing up two essential parts of the payment process: the merchant account and the payment gateway. These terms are often used interchangeably, but they play very different roles in how money moves from your customer to your business.

What is a payment gateway?

A payment gateway is the technology that transmits a customer’s payment data securely to the acquiring bank for authorisation. It's like the digital equivalent of a point-of-sale terminal, connecting your website, your customer, and the financial institutions that handle the transaction.

Key functions

• Encrypts and transmits payment details at checkout
• Sends authorisation requests to the payment processor or acquiring bank
• Delivers instant approval or decline messages back to the merchant

Gateways are essential because they secure sensitive data using encryption and ensure compliance with PCI DSS standards. In short, the gateway keeps your customers’ information safe and ensures the transaction process runs smoothly.

Common types of gateways

• Hosted gateways: Redirect customers to an external payment page.
• Integrated gateways: Process payments directly on your website using APIs.
• Local gateways: Tailored for domestic transactions and regional markets.
• Global gateways: Support multiple currencies and cross-border processing.

What is a merchant account?

A merchant account is a special type of bank account that allows a business to accept card payments. When a customer makes a purchase, the authorised funds are first deposited into this account before being transferred to the merchant’s main business bank account.

Key functions

• Holds authorised payments until they are settled
• Manages refunds, chargebacks, and reconciliation
• Supports currency conversion and transaction reporting

The merchant acquiring sector plays a vital role in the broader payments ecosystem. In fact, the merchant acquiring market itself grew from USD 25.43 billion in 2024 to USD 28.2 billion in 2025, driven largely by cross-border e-commerce and peer-to-peer payment trends.

Merchant account vs payment gateway comparison

Role in the payment process

While both systems are integral to online transactions, their functions occur at different stages.

The payment gateway operates at the pre-authorisation stage. It collects payment data, encrypts it, and passes it to the processor or bank for approval. Once authorised, the gateway communicates the outcome back to your website almost instantly.

The merchant account steps in after authorisation, holding the approved funds before transferring them to your business account. It’s also where settlement, reconciliation, and chargeback management take place.

In essence, the gateway moves the information; the merchant account moves the money.

Ownership and setup

Setting up a merchant account typically involves a review process. The acquiring bank or provider evaluates your business’s financial history, risk level, and compliance readiness. This underwriting ensures your business can responsibly handle payments.

A payment gateway, meanwhile, is primarily a technical integration. It doesn’t require underwriting but instead involves API or SDK setup to connect your checkout system with the broader payments network. Many modern processors combine both services to simplify onboarding for merchants.

Focus and functionality

Security and compliance

Both play critical roles in maintaining transaction security, but their responsibilities differ.

• Payment gateways handle encryption and ensure PCI DSS compliance.
• Merchant accounts manage financial settlement integrity and chargeback processes.

Many modern systems also include built-in fraud monitoring, tokenisation, and risk analytics for end-to-end protection.

How they work together

Every successful online payment requires both a merchant account and a payment gateway working in sync:

1. The customer enters their payment details at checkout.
2. The gateway encrypts and sends that data for authorisation.
3. The processor and issuing bank verify funds and approve the transaction.
4. The merchant account receives the funds temporarily.
5. Finally, the money is transferred into the business’s primary bank account.

Together, they create a seamless and secure flow from payment authorisation to fund settlement.

Pros and cons

Do you need both?

In most cases, yes. The two systems are complementary, not interchangeable. A gateway ensures secure data transmission, while a merchant account ensures that the funds reach you.

Use cases:

• Online retailers: Require both for card and digital wallet payments.
• Omnichannel businesses: Use both to link in-store and online transactions.
• Subscription services: Need merchant accounts for recurring payments and gateways for automated processing.
• Cross-border merchants: Benefit from multi-currency accounts and international gateway support.

With global payments revenue expected to rise from USD 2.4 trillion in 2023 to USD 3.1 trillion by 2028, mastering both parts of the payment process will be key to staying competitive.

What about payment service providers?

Many modern payment service providers like Antom simplify things further by providing an all-in-one payment solution that includes both a merchant account and a payment gateway.

This unified approach eliminates the need for multiple vendors, streamlines reporting, and provides a single dashboard for managing payments, refunds, and settlements. Antom also offers built-in risk tools, compliance support, and global coverage, making it easier for growing businesses to expand confidently into new markets.

How to choose the right payment setup

When deciding on your payment setup, consider the following:

1. Business needs: Define whether your sales are online, in-store, or both. Consider your target markets and growth plans.
2. Cost structure: Compare setup fees, transaction rates, and monthly minimums.
3. Security standards: Confirm PCI DSS compliance and access to fraud prevention features such as tokenisation and real-time monitoring.
4. Integration and scalability: Ensure compatibility with your e-commerce or POS system and flexibility for future growth.
5. International reach: For cross-border operations, look for providers with multi-currency support and local acquiring partnerships.

Conclusion

Understanding how merchant accounts and payment gateways differ, and how they work together, is essential for any business that accepts digital payments. The gateway secures and transmits the data, while the merchant account manages the funds.

Whether managed separately or through an integrated provider like Antom, these two components form the backbone of modern payment acceptance — ensuring security, compliance, and reliable cash flow for businesses in an increasingly digital world.