Don’t let Quora fool you
Navigating through the landscape of online payments can be tricky not only for eCommerce newbies, but for savvy users as well. That’s why staying alert and knowing your ways around becomes increasingly important. We’ll be debunking common myths digging into some misconceptions that lead to miserable consequences and consumer risks. Focusing today on why we need to draw the line between ‘acquiring’, ‘payment gateway’, and ‘processing’. Let’s dive in!
These days you can often see all the three on the Internet used not just in the same context, but interchangeably at times. Do not let the ‘all-knowing Google’ mislead you, because they are all separate notions inherently different from one another.
Let’s unpack a few things first. Acquiring per se is a broader area that embraces payment gateway, processing, and everything else involved in the process, while payment gateway is merely a technical tool used to process a payment. You go to a website, enter your card details – that’s when a payment gateway opens up as a set of parameters, or an entry point, that actually initiates your payment on the website. After the data is processed, the gateway spits out the result: payment approved / payment declined. Pretty much like a POS terminal in a brick-and-mortar store.
Processing literally has to do with the process of data input/output serving as a connection framework for the payment. It starts immediately when you enter your card details and a secure code to enable a security check-up into a payment gateway. Essentially, this is the system comprised of multiple participants: your banking card, a bank-issuer, a bank-acquirer, an International Payment systems, and a merchant website or an app – all interacting together to process your payment.
Anything else referred to as ‘acquiring’?
That’s when things get interesting, as it turns out that acquiring – intentionally or not – is also confused with another adjacent term – a p2p payment, or payment from one card to another via apps like PayPal or Venmo.
For a less savvy user, these might look pretty much the same on the surface. Yet, sending pizza money to a flatmate and buying a laptop online are two inherently different activities, if you think about it. More troubling is the fact that some artful online entrepreneurs (especially those who are new to business) would take advantage of this grey area to avoid paying commissions associated with acquiring.
Have you ever wondered when buying, say a laptop online, why are you asked to make a bank transfer instead of using a Visa payment gateway? That’s because a merchant want to avoid using Visa / Mastercard acquiring systems. And that’s actually pretty smart: with more expensive products, commission rate to be taken out of the profit can amount up to a staggering number! However, this type of activity is deemed illegal, as it is clearly misleading. Acquiring and mobile payments differ both in terms of the underlying tech, and consequences they bear for online merchants and consumers alike. With acquiring in place, you are protected by global Visa/Mastercard regulations that provide a money-back guarantee. Critically, if you buy the same laptop via a p2p transfer, you won’t have any guarantees whatsoever!
This sort of confusion puts everyone involved in an awkward position — to say the least, so beware when buying online. Make sure you pay via authorized payment gateways, and stick to reputable online vendors.
