gateway vs processor
Payment Gateway vs Payment Processor: What's the Difference?
Two different services, often sold together. Knowing which one is which tells you which bill is negotiable.
Gateway
Captures + tokenises card
Processor
Moves money to acquirer
Acquirer
Settles to merchant bank
Issuer
Customer's bank
Headline answer
A payment gateway captures the card data at checkout, tokenises it, and sends an authorisation request. A payment processor routes that request to the card networks and ultimately to the issuing bank, then handles the clearing and settlement back to your merchant bank account. Stripe, Square, PayPal, and Adyen do both in one product. Authorize.Net is gateway-only by default; you bring your own processor.
The four-party model
Solid box = the merchant's touchpoint. Dashed box = the bundled gateway and processor that Stripe, Square, and PayPal combine into one service.
Combined vs split offerings
| Feature | Combined | Split |
|---|---|---|
| One contract | ✓ | ✗ |
| One support ticket queue | ✓ | ✗ |
| Single tokenisation surface | ✓ | ◐ |
| Can switch processor without re-integration | ✗ | ✓ |
| Easier to negotiate IC+ rate | ◐ | ✓ |
| Stripe / Square / PayPal | ✓ | ✗ |
| Authorize.Net + processor / Spreedly + processor | ✗ | ✓ |
Cost implications
- Combined: one number (2.9% + 30c) bundles gateway and processor margin. Simpler accounting, harder to negotiate one without the other.
- Split: gateway fee is published ($25/mo + 10c per tx on Authorize.Net) and processor margin is negotiable separately on an interchange-plus deal.
- Above $1M/yr, split usually wins by 30-80 basis points because the processor margin negotiates against multiple bids while the gateway stays cheap.
- Below $1M/yr, combined wins on simplicity. The savings on split are eaten by the management overhead.
Related
verified Last verified June 2026