Online credit card transactions are processed through payment processors but can also be looped through either platform processors or gateways on their way to the payment processor.
A platform processor is built into the e-commerce platform that provides a company’s web store. For instance, if you choose to have your company’s web store hosted by an e-commerce platform, you have the option of using its in-house intermediary.
The main benefit is convenience. If your company already uses that web store, the intermediary will allow you to monitor payments, establish an order placement/payment processing timeline and schedule payouts of funds collected.
The main drawback is that they aren’t actually processing your payments. They can only forward your payment to the payment processor.
These can also serve as a business’s online payment processor. They handle the same back-end functions as a built-in payment processor, but it isn’t limited by platform and doesn’t do the actual credit card payment processing itself. Those functions are handled by a third-party company that the merchant never interacts with directly.
This may be a less-than-ideal solution for brick-and-mortar retailers for a few reasons:
• Unless they use an e-commerce platform that integrates their chosen processor into its platform, owners will have to keep track of all the online orders the company receives through two different portals
• The fee structure has to cover credit card processing fees and its own operating costs, potentially making it a more expensive solution than dealing with a payment processor directly.
Partnering with a payment processor reduces the number of steps your payment goes through to be processed, which could lower the cost per transaction. However, the payment processor may not have as many features as a gateway or platform.