Payment aggregators and payment gateways are essential tools for businesses to process online transactions. While both facilitate online payments, they operate differently.
Let’s delve into the key differences between payment aggregator and payment gateway. By highlighting their features and benefits, we will help you determine the most efficient payment option for your business and customers.
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Payment Aggregator vs Payment Gateway: A Deep Dive
A payment gateway is a secure network that acts as an intermediary between the merchant and the bank. In contrast, a payment aggregator is a solution that simplifies the end-to-end online payment process.
Below is a tabular comparison of the primary difference between a payment gateway and payment aggregator across various parameters.
Features |
Payment Aggregator |
Payment Gateway |
Authorisation Protocols |
A non-bank payment aggregator requires authorisation from the RBI under the Payment and Settlement Systems Act. A bank payment aggregator does not require this as banks already handle funds in their day-to-day activities. |
Bank payment gateways should follow the ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’ notification issued by the RBI and any follow-up notifications.
Non-bank payment gateways need to follow the guidelines issued by the RBI for technology providers for banks. |
Capitalisation Guidelines |
Non-bank payment aggregators need to have a net worth of ₹15 crore by 15th March 2021 and a net worth of ₹25 crore by 31st March 2023. They need to always maintain a net worth above ₹25 crore thereon. | Payment gateways are not subject to capitalisation guidelines by the RBI. |
Governance Structure |
Payment aggregators have to be professionally managed and their promotors must satisfy the proper criteria prescribed by the RBI. | Payment gateways are not subject to specific governance guidelines by the RBI. |
Preventing Money Laundering |
Payment aggregators need to comply with guidelines issued by the RBI’s Department of Regulation in their ‘Master Direction – Know Your Customer (KYC) Directions’ and any alterations made to the same. | Payment gateways need to comply with guidelines issued by the RBI’s Department of Regulation in their ‘Master Direction – Know Your Customer (KYC) Directions’ and any alterations made to the same. |
Merchant Onboarding Process |
They need to have a board-approved policy for merchant onboarding.
They also need to ensure that the merchants do not save customer card data. They are also responsible for checking PCI-DSS and PA-DSS compliance. |
They are not subject to specific merchant onboarding guidelines by the RBI. |
Services Provided |
Provides additional services, such as reporting, analytics, customer support, etc. | Provides only transaction processing service. |
Integration |
Requires you to integrate with only one service provider. | Requires you to integrate with each payment method or bank separately. |
What is a Payment Gateway?
A paymеnt gatеway is a tеchnological solution that facilitates card-not-prеsеnt transactions for mеrchants. Serving as an intermediary between customers and merchant banks, it securely transmits encrypted payment data. This crucial link ensures the sеcurе verification and transfеr of funds whilе prioritising data sеcurity, thus protеcting against potential fraud.
What is a Payment Aggregator?
A payment aggregator is a third-party provider that streamlines payment acceptance for merchants. It consolidates multiple payment methods into a single setup, eliminating the need to manage numerous accounts. Transactions are efficiently processed using the aggregator’s Merchant Identification Number (MID).
Notably, payment aggregators can function as payment gateways, going beyond traditional gateways by offering a broader range of services. These include seamlessly managing diverse payment types, enhancing convenience and flexibility for businesses and their customers in the rapidly evolving landscape of digital payments.
Payment Gateway vs Payment Aggregator: Choose the Best for Your Business
Choosing between a payment gateway and a payment aggregator depends on the specific needs and preferences of your business. If you require a straightforward and secure solution for card-based transactions, a payment gateway may suffice.
In contrast, a payment aggregator offers a wide range of payment options, enhancing customer convenience. Consider the scale of your business: established enterprises with high transaction volumes may prefer payment gateways for greater control and customization, while smaller or newer businesses might benefit from the simplicity and cost-efficiency of payment aggregators.
You can negotiate lower rates with payment gateways for cost savings or choose payment aggregators to access additional tools and resources that enhance customer experience and business performance. Select the option that best aligns with your unique business goals and requirements.
Frequently Asked Questions
1. Is paymеnt procеssor thе samе as paymеnt aggrеgator?
No, a payment processor is not the same as a payment aggregator. A payment processor is an entity that handles the actual transfer of funds from the customer’s account to the merchant’s account. A payment aggregator, on the other hand, is an entity that offers a unified platform for accepting various payment methods.
2. What are the bеnеfits of a paymеnt aggrеgator?
- It allows mеrchants to accеpt multiple paymеnt mеthods with a singlе intеgration.
- It simplifiеs thе signup and vеrification process for mеrchants.
- It enhances the customer еxpеriеncе by offering convenience and flexibility.
3. Give an example of a paymеnt aggrеgator.
Razorpay is a payment aggregator in India that helps businesses accept payments online. Razorpay has a number of payment solutions, including Payment Gateway, Payment Links, Payment Pages, and Payment Button.
4. Is UPI a payment aggregator?
No, UPI (Unified Payments Interface) is not a payment aggregator. UPI is a real-time payment system developed by the National Payments Corporation of India (NPCI) that facilitates inter-bank transactions directly between bank accounts using a mobile app. Payment aggregators, on the other hand, consolidate payments from multiple sources for merchants.
5. Do payment aggregators and gateways handle payment security differently?
Yes, payment aggregators and gateways handle payment security differently. Payment gateways focus on securely transmitting payment information between the customer, the merchant, and the bank, using encryption and fraud detection measures. Payment aggregators, in addition to providing similar security features, also manage the flow of funds from multiple payment methods and ensure compliance with regulatory standards.
6. Can businesses switch between payment aggregators and payment gateways?
Yes, businesses can switch between payment aggregators and payment gateways, though the process may involve technical adjustments and renegotiation of terms. Choosing the right provider depends on factors like transaction volume, integration capabilities, fees, and the range of services required.
7. Which option is better for international transactions?
For international transactions, payment gateways are often better suited as they typically offer more robust support for cross-border payments, multiple currencies, and global compliance standards. However, some payment aggregators also provide comprehensive international payment solutions, so the best option depends on specific business needs and service offerings.
