4 popular types of payment gateway

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.

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:

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.

Advantages:

• 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
• Customize

Disadvantages:

• 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.

Advantages:

• Great customer service - completing the whole transaction in one location
• Customisable flow - the merchant can monitor the payment journey

Disadvantages:

• 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.

Advantages:

• Customisable - has complete oversight of the payment journey's customer experience and UI
• Integrative capable - can be used for mobile devices, laptops, etc.

Disadvantages:

• 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.

Advantages:

Quick and easy to install - good for small businesses requiring a simple one-time payment system

Disadvantages:

Basic features only - usually do not allow returns or repeated payments, so it's not suitable for wholesalers

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.

Also read:

• Online Payment Gateway
• Best payment gateway for international transactions