Every ecommerce founder eventually asks the same question: 'Why is 3–5% of my revenue disappearing into payment fees?' This guide walks through how modern payment processing actually works, the difference between a payment gateway and a merchant account, and how to pick the right stack for your store.
Gateway vs merchant account vs processor
Your payment gateway (Stripe, Authorize.net, Braintree) securely captures the card. Your merchant account holds the funds before they're deposited into your bank. Your processor (Chase, Worldpay, TSYS) actually moves the money between banks. All-in-one solutions like Shopify Payments, Square, and Stripe bundle all three - simpler, but you lose leverage on rates.
The real cost of 'free' payment tools
- ✓Stripe Standard: 2.9% + 30¢ per transaction
- ✓Shopify Payments: 2.4%–2.9% + 30¢ (higher on lower Shopify plans)
- ✓PayPal: 3.49% + 49¢ - the highest of the big three
- ✓Square: 2.6% + 10¢ in-person, 2.9% + 30¢ online
- ✓Custom merchant account: often 1.8%–2.4% once you're past ~$50K/mo
High-risk merchant accounts
Selling CBD, supplements, firearms, subscription boxes, adult content, or nutraceuticals? Stripe and Shopify Payments will freeze your account. You need a high-risk merchant account - companies like Easy Pay Direct, Corepay, or PaymentCloud specialize in these verticals. Expect higher rates (3.5%–5%) but no surprise account freezes.
What we recommend in 2026
For most stores under $500K/year: Shopify Payments if you're on Shopify, Stripe if you're custom. Past $500K, negotiate a dedicated merchant account and route Stripe as a backup. Always keep two processors - one frozen account can shut your business down overnight.