Posted by tina on Aug 02, 2016


Understanding International Payment Solutions

International Payment Solutions Merchant Account Vs. Payment Gateway

Online payment solutions seem like a complicated aspect of running a business till you do the research and understand some basic concepts. Which is why it helps to start with the differences between payment gateways and merchant accounts.

Here’s what you need to know:

Payment Gateways

As the name suggests, payment gateways act like online gates through which your customers can pay you. A payment gateway allows you to accept credit or debit card payments from customers. Think of it as an online version of the point of sales terminal you find in most stores.

The gateway is the connection to the secure banking network through which transactions are processed.  When your customers make a purchase online, card details are transmitted to the secure payment processing network for authorization & approval. Funds are settled to your business bank account.   

Merchant Accounts

If you want to accept card payments online through your website, you need a merchant account, which is why some providers package the gateways & merchant processing together as an international payment solution.

Merchant accounts resemble bank accounts  A merchant account is similar to a short term line of credit extended to you by a bank.  

Your merchant accounts that lets you accept credit and debit card payments.  The gateway is the secure network through which the transactions are approved or declined.   

Offshore merchant accounts help you accept payments from all over the world. Even non-US companies can open a merchant account to accept payments from their US clients. International payment solutions like these make it easier for your customers to buy from you.

Dedicated vs. Aggregated Merchant Accounts

Merchant accounts come in two distinct flavors - dedicated and aggregate.

A dedicated merchant account and gateway is used only for your business. It is an exclusive account that is used only by a single business.  Aggregate merchant accounts pool your transactions with other merchants on a single gateway. 

If you qualify for a dedicated merchant account, that's the best way to go.  Since you are the only business using the account, you don't have to worry about any other merchants negatively affecting your processing ability.  Other benefits of dedicated merchant accounts include:

  • Dedicated descriptor. The descriptor is the information your customers see on their credit card statements showing the details of the transaction.  With a unique descriptor & customer service number, it is far less likely that buyers will forget what was purchased.  And they can contact you directly if there are any issues with the purchase.
  • Lower rates.  Rates for dedicated merchant accounts are much lower than rates for aggregate accounts.  
  • Greater control.  You control the gateway, including setting your own parameters regarding the transactions that are allowed to be accepted or declined.

Aggregation accounts have many different merchants processing on the same gateway. Rates are high. Settlement times are long. You have a generic descriptor.  And your processing can be put in jeopardy if another merchant on the gateway has high chargebacks or is not managing their account correctly.

Generally, merchants that cannot obtain a direct merchant account sign up for an aggregate account.  It's a decent way to get started processing and build some processing history before you move to a direct account.  

Picking the right one

Member service providers (MSPs) or Independent sales organizations (ISOs) have arrangements with payment processors and international acquiring banks to provide international payment solutions. There are a lot of MSPs and ISOs out there and they all charge different fees and offer different features. For an online business, picking the right provider is absolutely essential.

Picking the right provider depends on the nature of your business. High risk merchants have different processing requirements than standard risk ones.  And need the special features offered on a high risk processing gateway to mitigate fraudulent transactions. 

A global e commerce company should be able to accept payments across borders and in multiple currencies. Picking the best one from a wide range of international payment solutions is a balancing act. You need to weigh the fees and terms against the convenience and features of a service to see what fits your business the best.

A recent survey showed that customers online preferred a payment method that protects data, is simple to use and easy to understand.


Trust and security play a key role when you offer online payment options to your customers. Securing payments has never been easy, but with a shift to online payments and international payment solutions, security features have been built-in to protect your clients and your business.

Simplifying and securing the payment process is your responsibility. Customers expect a seamless process from you.

Reach out to a payment processing expert if you need questions answered.  Payment processing agents get paid by the banks & processors, not by you.  So, take advantage of the free advise that is readily available to you when making your decision.  

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