Shopping Cart vs Payment Gateway

To accept online payments, you need both a payment gateway and an online shopping cart. Do you know the difference between the two?

Shopping Cart

An online shopping cart is an eCommerce software on a website that allows customers to save items for a future purchase.

The shopping cart has several functions. It holds items for purchase, calculates tax and shipping, and totals the order amount.

Types of Carts

There are essentially 2 types of shopping carts – Licensed and Hosted.

  1. Licensed – The merchant pays a one-time fee and then owns the software. This type of shopping cart is fully customizable and the merchant can place it on any web server.
  2. Hosted – Also known as a Software as a Service (SaaS). The merchant pays a monthly fee to use and access the software. This cart cannot be customized and the merchant cannot choose the web server’s location.

Payment Gateway

A payment gateway authorizes online credit card sales by either approving or declining a sale.

How does it work? – It transmits financial information between a payment portal and an acquiring bank.

The gateway allows merchants to process credit card transactions in real time and it allows a customer to know instantly if their sale is approved.

Physical vs Virtual

To better understand how these work together, picture the steps taken when shopping in a physical grocery store.

  1. You collect the items you need and put them in your cart.
  2. You go to the checkout station and let the store clerk run your items through the scanner.
  3. The total price is added up by the register and shown on the screen.
  4. You swipe your credit card through the POS terminal.
  5. Your sale is either declined or approved, and you’re done!

Steps 1-3: The shopping cart is the virtual equivalent of you putting your groceries into a shopping cart at the store and giving them to the cashier to be rung up for the total price.

Step 4-5: The gateway is the virtual equivalent of the physical hardware you swipe your credit card with to pay for your groceries.

Shopping carts and payment gateways are often confused because they almost always work together. Without the cart, you cannot get your items to checkout. Without the gateway, you cannot pay for your items!

You can find many all-in-one solutions that integrate the gateway and the shopping cart. This makes the process of choosing and setting up the software painless and simple!