When building an international eCommerce website, many online sellers consider Authorize.net because it is one of the most widely used payment gateways in the United States. However, many people mistakenly believe that simply signing up for an Authorize.net account is enough to start accepting payments.
In reality, that is one of the most common misconceptions.
While Authorize.net is indeed a payment gateway, it does not hold funds or transfer money directly to your bank account. To accept online payments successfully, businesses typically also need a Merchant Account and a Payment Processor, such as Chase Payment Solutions, Fiserv, or Worldpay.
So, what exactly is Authorize.net? Why do you still need a Merchant Account? And how does Authorize.net differ from PayPal and Stripe?
In this guide, EasyPay OnBoard explains the entire payment flow and helps you choose the right payment solution for your business.
What Is Authorize.net?
If you’ve researched international payment solutions, especially for eCommerce, Print-on-Demand (POD), or dropshipping businesses, you’ve probably come across Authorize.net.
A common question is: Is Authorize.net a payment gateway?
The answer is yes.
Authorize.net is a payment gateway designed to securely connect your website to payment processing systems. However, many merchants mistakenly assume that opening an Authorize.net account is enough to start receiving payments.
That isn’t the case. To understand why, it’s important to first understand the role of a payment gateway.
How Does Authorize.net Work?
Authorize.net provides payment gateway services only.
Its primary functions include:
- Connecting your website to the payment processing network.
- Encrypting customers’ credit card information.
- Sending transaction data securely to the payment processor.
- Returning the authorization result to your website.
Once a transaction is approved, the movement of funds is handled by the Merchant Account and the Payment Processor, not by Authorize.net itself.
What Is a Merchant Account?
A Merchant Account is a specialized bank account that allows businesses to receive payments made by credit and debit cards.
Here’s how the payment flow works:
- The payment gateway sends transaction data.
- The payment processor processes the transaction.
- The funds are deposited into the Merchant Account.
- The funds are then transferred to the business’s bank account.
In other words, the Merchant Account serves as the temporary destination for card payments before the money reaches your business bank account.
Without a Merchant Account, Authorize.net cannot complete the payment process.
What Is a Payment Processor?
A Payment Processor is the company responsible for handling card transactions.
Some of the most popular payment processors include:
- Chase Payment Solutions
- Fiserv
- Worldpay
- Elavon
- TSYS
Their responsibilities include:
- Communicating with the cardholder’s issuing bank.
- Verifying payment information.
- Performing fraud detection.
- Authorizing or declining transactions.
- Depositing funds into the Merchant Account.
Once your Merchant Account is approved, you’ll receive a Merchant ID (MID), which uniquely identifies your business within the payment processing network.
This Merchant ID is required when connecting your Merchant Account to Authorize.net.
What Do You Need to Use Authorize.net?
Unlike PayPal or Stripe, businesses usually need to prepare several requirements before they can use Authorize.net.
1. Establish a Business Entity
Most U.S. payment processors require a legally registered business.
Typical requirements include:
- A U.S. LLC or Corporation
- EIN (Employer Identification Number)
- A live business website
- Refund Policy
- Privacy Policy
- Terms of Service
- Clearly defined products or services
2. Open a Business Bank Account
You’ll need a business bank account to receive payouts.
Common banking options include:
- JPMorgan Chase
- Bank of America
- Wells Fargo
- Mercury
Some processors require a U.S. bank account, while others support international businesses.
3. Prepare KYC Documents
Payment processors typically require:
- Certificate of Incorporation
- EIN Confirmation Letter
- Passport or government-issued ID
- Proof of Address
- Active business website
- Bank statements (if available)
- Revenue reports
- Estimated monthly processing volume
4. Complete the Underwriting Process
Before approving a Merchant Account, the payment processor evaluates your business risk based on factors such as:
- Industry type
- Country of operation
- Target markets
- Shipping time
- Payment processing history
- Chargeback ratio
- Product category
Businesses operating in high-risk industries such as Print-on-Demand, dropshipping, or digital products often undergo a more rigorous review process.
5. Receive Your Merchant ID and Connect to Authorize.net
After approval, you’ll receive:
- Merchant ID (MID)
- Connection credentials
- API or integration information
You can then integrate your Merchant Account with platforms such as:
- Authorize.net
- WooCommerce
- Magento
- BigCommerce
- Custom-built websites
In some cases, Merchant Accounts can also be connected to Shopify through supported payment processors.
Can You Get a Merchant Account If You’re Not Based in the U.S.?
The answer is yes, but the process is generally more challenging.
For businesses based in Vietnam or other countries outside the United States, there are typically two options.
The first option is to establish a U.S. company (LLC or Corporation), open a U.S. business bank account, and then apply for a Merchant Account.
The second option is to work with payment processors that support international merchants, such as:
- Stripe
- Adyen
- Checkout.com
- Worldpay
Approval requirements vary depending on your country and business model.
Authorize.net, PayPal and Stripe
Authorize.net functions solely as a payment gateway, which means businesses must first obtain a Merchant Account and Merchant ID before they can accept payments.
By contrast, PayPal and Stripe provide a more integrated payment solution. They offer the payment gateway, process transactions, and manage Merchant IDs within their own ecosystems.
As a result, merchants generally only need to create an account, complete identity verification, and integrate the service into their website to begin accepting payments, provided they meet the platform’s eligibility requirements.
This makes PayPal and Stripe easier and faster to implement, while Authorize.net offers greater flexibility for businesses that want to choose their own Merchant Account provider and payment processor.
When Should You Use Authorize.net?
Authorize.net is an excellent choice for businesses that:
- Want the flexibility to choose their own Merchant Account.
- Prefer working directly with major payment processors.
- Process stable or high transaction volumes.
- Want to optimize payment processing costs.
- Need advanced integrations with multiple eCommerce platforms.
For startups or businesses that have not yet established a legal entity, PayPal or Stripe is usually the simpler and faster option.
Conclusion
Authorize.net is a payment gateway, not a Merchant Account or a Payment Processor.
This means that opening an Authorize.net account is only one component of an online payment system. To receive customer payments, businesses must also obtain a Merchant Account through a payment processor such as Chase Payment Solutions, Fiserv, or Worldpay, and receive a Merchant ID for integration.
In contrast, PayPal and Stripe combine the payment gateway and payment processing functions into a single platform, making implementation easier for most businesses.
Ultimately, the right solution depends on your business size, target market, operational needs, desired flexibility, and long-term payment strategy.
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