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Business nowadays have changed from traditional payment systems (such as direct bank transfer or cash) to online payment gateways because of the efficiency and convenience of instant payment, secure transfer, credibility and other valuable benefits. So, How many types of payment gateway? What are advantages and disadvantages of payment gateway?
A payment gateway is an application that is used to complete and secure transactions. The main purpose is to authorize payment and process credit/ debit cards for online business or brick-and-mortar stores.
Below are the 4 different types of payment gateway with its pros and cons, you can consider which one is the most suitable for your business:
How many types of payment gateway?
1. Hosted payment gateway
Hosted payment gateway direct your clients away from the checkout page on your site. When the client clicks the link of gateway, they are redirected to the Payment Service Provider (PSP) site. The user fills out his or her payment information here; and the customer is routed back to your website to complete the checkout process after the buying process.
- Secure - Transaction is Fully PCI compliant and defended by the fraud protection system
- Easy - This type of payment gateway is common to most users, simple to use and easy to install
- The merchant cannot monitor the entire customer's purchasing experience because of the external payment gateway factors.
Also read: How to integrate Payment Gateway in website?
2. Self-hosted payment gateways
In this form of gateway, the payment information inside the merchant's website is gathered from the user. Upon requesting the information the collected data will be sent to the URL of the payment gateway. Many gateways need a particular format for the payment data, while others need a hash key or a hidden key.
- Great customer service - completing the whole transaction in one location
- Customisable flow - the merchant can monitor the payment journey
- No support system - Self-hosted payment gateways do not typically have a technical support team. If anything fails, you'll need to find out how to fix the problem by yourself. And you can employ an accomplished specialist who may be expensive.
3. API hosted payment gateways
Customers input their credit or debit card details directly on the merchant's checkout page with API hosted payment gateways. Payments are handled using API (Application Programming Interface) or HTTPS queries.
- Customisable - has complete oversight of the payment journey's customer experience and UI
- Integrative capable - can be used for mobile devices, laptops, etc.
- Security - Compliance with PCI DSS and purchasing SSL certification are the requirement that merchants have to strictly follow
4. Local bank integration gateways
Local bank integration gateways redirect the customer to the website of the payment gateway (the website of the bank), where they input their payment information and contact information. The customer is redirected back to the merchant's website after making the payment, with payment notification data sent upon redirection.
Quick and easy to install - good for small businesses requiring a simple one-time payment system
Basic features only - usually do not allow returns or repeated payments, so it's not suitable for wholesalers
4 popular types of payment gateway - Advantages and disadvantages
What types of payment gateway will you choose?
Above all, every types of payment gateway has its own advantages and disadvantages. The payment gateway you select will be based on your business model, the types of features you need and how much you want control over the payment experience of your customers.
Nowadays, a self-hosted payment gateway would be the most seamless platform for online companies and wholesalers. Because it allows the customer to finish a single page transaction and gives the merchant control over the customer experience.
Frequently Asked Questions
1. What are the types of payment gateway?
Payment gateways link your company website to a payment processor, making it easier for customers to complete transactions on your ecommerce site. You have various alternatives when it comes to setting up a payment system.
There are 4 types of payment gateway:
- Hosted payment gateway.
- Self-hosted payment gateway.
- API hosted payment gateway.
- Local bank integration gateway.
2. How many types of payment gateway?
There are four types of payment gateways:
1. Hosted payment gateway.
2. Self-hosted payment gateway.
3. API hosted payment gateway.
4. Local bank integration gateway.
Every type of payment gateway has its own advantages and disadvantages. Hence, the payment gateway you select will be based on your business model, the types of features you need, and how much you want control over the payment experience of your customers.
3. Which payment gateway is most popular?
Self-hosted payment gateway would be the most seamless platform for online companies and wholesalers. Because it allows the customer to finish a single page transaction and gives the merchant control over the customer experience.
4. What are the advantages and disadvantages of a payment gateway?
Each type of payment gateway has its pros and cons, you can consider which one is the most suitable for your business.
- Secure payments.
- Quick and easy to install.
- Customizable flow.
Some payment gateways have no technical support team. So, if anything fails, you'll need to find out how to fix the problem by yourself.
PayCEC offers 24/7 customer support, then you can reach us whenever you have any issues. Contact us now!
5. What is a self-hosted payment gateway?
In this form of gateway, you will have full control over your user payment experience since the customer payment details are collected directly on the merchant website. These details are then encrypted and submitted to the third-party payment gateway for authorization.
6. What is an API-hosted payment gateway?
API-hosted payment gateway is where both the payment details and processing are handled directly on the merchant website. API-hosted gateways offer a fully customizable checkout experience, and can be integrated with a variety of platforms, including mobile devices.
7. What is a non-hosted payment gateway?
A non-hosted payment gateway allows the user to enter their debit card or credit card information directly on the checkout page of the store owner. With this option, your customers aren’t directed to another third party page to complete the transaction. They enter their payment information directly on your website.
While having that amount of control is a significant bonus, using a non-hosted payment gateway means you're in charge of transaction security and data protection throughout the checkout process. This can necessitate a lot of resources, which many merchants may not have.
8. What is a hosted payment gateway?
Hosted payment gateway directs your clients away from the checkout page on your site. When the client clicks the link of the gateway, they are redirected to the Payment Service Provider (PSP) site. The user fills out his or her payment information here; and the customer is routed back to your business website to complete the checkout process after the buying process.
PCI compliance and fraud protection are provided by these payment gateways, ensuring a high level of security. They're also highly user-friendly and simple to set up, as the host handles all of the details.
9. What is hosted payment?
In the most basic terms, a hosted payment page is one of the most common ways to accept online payments. The hosted payment gateway will direct your clients away from the checkout page on your site.