A credit card processing gateway, is what is used in conjunction with a cheap merchant account to be able to process credit cards online. It is a fundamental and essential part of selling all products and services online.
It is the equivalent of the credit card swipe machines you see in retail stores, except it is for internet transactions. In the same way you cannot run a credit card in a store without this terminal, the same is true for taking credit cards online. While these may be very new to you, don't be intimidated by the sound of them. They are usually quite easy to setup and use, as long as you are working with a good company.
Most companies tend to sell both together as a package, however the actual fees and bills you will receive for each tend to come separately. The costs of these services vary widely, but for the most part, they either:
For example, they may charge you almost nothing for setup fees, but they will likely gouge you on the processing fees, which can easily result in hundreds or thousands of dollars in later on. Another thing they do to get you low upfront pricing is to just lock you into a longer contract (just like cell phone companies that give you a "free" phone). But even if you go with the "less upfront, more later on" you usually have power to price matchl especially once your initial contract is complete.
Note: Paypal is can act as a merchant account, but that's not how most companies end up using it, because not only is it more expensive, but it's difficult to implement, can seriously reduce sales, and is not business friendly at all. You can read more about Paypal, but trust us, it is not an option unless you aer barely getting off the ground and absolutely not afford to spend $20 - $30 per month. If you must use Paypal, our advice is to switch to a real gateway and a cheap merchant account as soon as you are making money.
