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Payment Gateways: What Every Rental Manager Needs to Know

Payment Processing

What is a payment gateway? 

A payment gateway facilitates communications between the merchant and the processing bank necessary for the merchant to get paid electronically by their customer. 

A payment is essential technology: any business that accepts payments in a card not present (CNP) environment (i.e., online, over the phone), and does not use a physical terminal, needs a payment gateway to facilitate the process. 

A payment gateway can, in some respects, be considered the ‘virtual’ equivalent of physical credit/debit card readers found in brick-and-mortar retail establishments, with additional benefits.  

Payment gateway benefits 

  • Accept payments through your rental management software, seamlessly updating the portfolio from invoiced to paid. 

  • The ability to accept multiple forms of payment including credit, debit, ACH/e-Check, and sometimes other payment methods (e.g., Crypto and Apple Pay). 

  • Reduce fraud risk by using a gateway that encrypts or tokenizes transactions, verifies address and other card information, and analyzes velocity (card usage) patterns. 

  • Additional functionality such as recurring billing, account updater, surcharge (passing credit card processing fees to the consumer), and more may be available depending on the gateway. 

The difference between payment gateway and payment processor 

These terms are sometimes used interchangeably, but they are in fact different. Think of them as two-halves of the transaction puzzle: 

  • A payment gateway collects the customer information and encrypts it for payment. 

  • A payment processor uses that information to contact both the customer’s and the merchant’s banks, debiting one account and crediting the other. 

How a payment gateway works 

The gateway transfers payment data from the point where it is entered (website, rental management software, mobile device) to the payment processor to start the processing cycle.   

  • The gateway encrypts payment information entered on your website or software and sends it to the payment processor.   

  • For card payments, the payment processor notifies the card-issuing bank, which either approves (authorizes) or declines the transaction.   

  • The payment processor sends the issuer’s response back to the payment gateway, which passes it to the software or website.   

  • If the issuer sent an approval response, funds are debited from the customer’s card account and credited to the merchant’s bank account.   

Enlarge The Gateway Graphic

Not all payment gateways are the same 

  • Data Transmission: If the correct data is passed with each transaction, some of the rates and fees you are charged by the card brands (Visa, MasterCard, Discover, American Express) can be reduced. Not all gateways pass the transaction data needed for you to get the best rates.  

  • Payment processor choice: Some gateways are specific to a single processor, hence if you ever want to change processors, you will also need to change gateways.  

  • Services offered: Some gateways offer more than just credit/debit card processing. Some also offer ACH/e-check services, crypto processing, and more. Depending on your needs this could be important to your business.   

  • Security protection: As a business that accepts card payments, you are responsible for complying with PCI DSS security requirements to protect your customers’ personal and card data. A good gateway can help reduce your security exposure.   

  • Fraud protection: Fraud is a real and growing threat for any business that takes electronic payments. Among the measures you take to combat fraud should be your gateway and the services they provide.    

  • Cost: Every payment gateway charges fees. These can include set up, monthly, per transaction, and/or per batch fees. Some gateways also assess a rate on the transaction volume. Fees vary from gateway to gateway.   

The payment gateway you use is an important part of your business. If you have a choice about what gateway you use, our team at Ascent Payment Solutions can help you with the decision. With over 20-years of payment processing and lodging experience, we are uniquely qualified to provide with the details you need to make the best choice of not only a payment processor but of the right payment gateway.   

Questions? Contact and we will be glad to help. 


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