Understanding Payment Gateways, Processors, and Merchant Accounts in Canada

Canadian businesses do not actually need to manage three separate providers for every payment anymore, but it helps to understand what a payment gateway, payment processor, and merchant account do and where a modern pay by bank provider like Clik2pay fits into that picture. This is especially true if you want to reduce card fees and offer customers a simple “pay from bank account” option using Interac e‑Transfer.​

Why these three terms matter

For traditional card payments, three components usually work together behind the scenes:

• Payment gateway: Captures and encrypts the customer’s payment details.

• Payment processor: Routes and authorizes the transaction over card or bank rails.

• Merchant account: Temporarily holds funds before they move into your business bank account.

With direct‑from‑bank payments, some of this complexity can be abstracted away by a single provider like Clik2pay, which combines gateway‑like checkout, processing, and settlement tools into one pay by bank solution.​

What is a payment gateway?

A payment gateway is the secure front door to your checkout. It:

• Captures payment details at checkout (online, in‑app, or via QR code) and encrypts them.

• Sends those details to the payment processor for approval and never exposes raw account credentials to the merchant.

In a pay by bank context, the gateway experience might be a “Pay from your bank” button, a link in an invoice, or a QR code that launches the bank‑selection flow. With Clik2pay, customers click a link or button, see your business name and amount, choose their bank, and approve payment through familiar online or mobile banking via Interac e‑Transfer.​

What is a payment processor?

The payment processor is the traffic controller that moves money between banks, card networks, and your business. It:

• Talks to card networks or bank rails to authorize payments and confirm if funds are available.

• Manages settlement and reporting so you know which invoices or orders are paid.

Traditional processors focus heavily on card networks, but pay by bank processors connect directly to Canadian financial institutions and Interac e‑Transfer to move money from account to account in near real time. Clik2pay processes these direct‑from‑bank payments at a fraction of the cost of cards, with real‑time confirmations, end‑to‑end payment tracking, and settlement files for reconciliation.​

What is a merchant account?

A merchant account is a holding area for your card transactions. It:

• Temporarily stores funds after authorization and before they are released to your regular business bank account.

• Is typically required for card processing, and often comes with specific terms, reserve rules, and fees.

Direct‑from‑bank models can simplify this step. With Clik2pay, funds move directly from the customer’s bank account to the business bank account via Interac e‑Transfer, so there is no separate card merchant account to manage and no chargebacks on completed payments. For many businesses, this means fewer intermediaries, fewer surprises on statements, and a more predictable cost structure.​

How Clik2pay fits into the picture

Clik2pay acts as a next‑generation, bank‑based alternative to traditional card gateways, processors, and merchant accounts for Canadian businesses. It wraps the key pieces merchants care about into a single solution:​

• Customer experience layer:

  • Pay by bank button at eCommerce checkout, links in invoices, QR codes on bills, and agent‑assisted or no‑code options.​

  • No customer registration or app download needed; anyone with a Canadian bank account can pay.​

• Processing and settlement:

  • Real‑time or near‑real‑time payment confirmations using Interac e‑Transfer with multiple layers of bank‑grade security.​

  • Detailed status updates, transaction history, and settlement files that plug into existing accounting and ERP tools.​

• Business impact:

  • Lower acceptance costs compared with credit cards, because payments move directly from bank to bank.​

  • Access to the vast majority of Canadian bank accounts, so you can reach customers who prefer debit, do not have credit cards, or want a simpler way to pay their bills online.​

When to use each—and why pay by bank now

In practice, most Canadian businesses benefit from offering both cards and pay by bank, then steering volume toward the lowest‑cost, most convenient option for each use case. Cards can remain useful for impulse or rewards‑driven purchases, while Clik2pay is ideal for:

• High‑value or recurring invoices where card fees are painful.

• Bill payments, subscriptions, donations, and loan repayments where bank account is the natural funding source.​

• Customers who are already comfortable using Interac e‑Transfer and prefer not to enter card details online.​

By understanding the roles of the gateway, processor, and merchant account—and choosing a pay by bank provider that streamlines them—Canadian businesses can give customers more ways to pay while cutting costs and complexity. Clik2pay offers that streamlined experience using familiar Interac e‑Transfer flows and direct‑from‑bank payments, wrapped in a single, modern solution.