How to Choose the Best Payment Gateway for Your Business in 2025?

In an increasingly digital world, businesses must offer customers seamless and secure online payment options to remain competitive. As e-commerce continues to grow, predicted to account for nearly 21% of global retail sales by 2026, choosing the right payment gateway is a critical decision that can significantly impact your business’s success.

A payment gateway facilitates the secure transmission of sensitive payment data between the customer, merchant, and payment processor, enabling businesses to accept electronic payments with ease.

Payment Gateway Basics: What Matters Most

A secure payment gateway is the bedrock of customer confidence. In fact, 25% of shoppers will abandon their cart if they don’t trust a website with their credit card information. Modern gateways do more than just encrypt data; they actively combat evolving fraud threats.

• Protect Customer Data: Look for gateways that utilize cutting-edge security like tokenization. With tokenization, the actual card details are replaced with a unique digital identifier, making the data useless to fraudsters. This technology is rapidly becoming the standard, with adoption by 60% of merchants in 2024 and a proven 30% reduction in fraud for major networks like Visa.
• Leverage AI for Detection: The most effective gateways now use Artificial Intelligence (AI) to analyze transactions in real-time. AI is crucial for identifying complex fraud patterns that older systems would miss. With over 71% of financial institutions now using AI to fight fraud, choosing a gateway without this capability puts you at a disadvantage.

Related Read: What is a Payment gateway and How it works?

How to Choose a Payment Gateway? 15+ Factors

When selecting a payment gateway for your business, consider the following factors:

1. Transaction Cost

One of the primary considerations when choosing a payment gateway is the transaction cost. Most gateways charge a fee per transaction, which can vary based on the provider and your business’s transaction volume. Some providers offer tiered or volume-based pricing, reducing costs for businesses with high transaction volumes. 

It’s crucial to understand the fee structure and evaluate its impact on your profit margins, taking into account both transaction volume and value.

• For businesses with primarily high-value transactions, look for gateways with a set monthly fee and low per-transaction fees.
• If your business processes a high volume of transactions, consider providers that offer volume discounts or tiered pricing to minimise costs.

2. Consider Overall Speed and Performance

In e-commerce, speed isn’t just a feature; it’s a fundamental driver of revenue. Today’s customers have high expectations and very little patience for delays, especially during the payment process. A slow gateway affects everything from customer trust to your final conversion rate. When evaluating a provider, consider speed in three key areas:

• Checkout Page Load Time: Before a customer can even enter their payment details, the checkout page must load instantly. The impact of this initial load time is staggering. Recent studies from 2024 and 2025 show that a mere one-second delay in page load time can decrease conversions by 7%. Furthermore, 53% of mobile shoppers will abandon a site entirely if it takes more than three seconds to load. A fast, optimized gateway ensures your checkout page appears immediately, keeping the customer’s purchase momentum going.
• Transaction Processing Speed: This is the critical moment after the customer clicks “Pay.” The authorization process should feel instantaneous. While the backend settlement may take a day or two, the customer-facing transaction must be processed in milliseconds. Any lag or spinning wheel at this stage creates anxiety and doubt, leading to abandoned carts and lost trust. A high-performance gateway processes transactions immediately, providing the quick, seamless confirmation that customers expect.

3. Payment Methods 

Offering your customers their preferred payment methods is crucial for enhancing their experience and increasing the likelihood of successful transactions. When selecting a payment gateway, ensure that it supports a wide range of payment options, including credit/debit cards, digital wallets, and any international payment methods that may be relevant to your target audience.

By providing a diverse range of payment methods, you cater to the preferences of different customer segments and reduce the risk of cart abandonment due to limited payment options. Keep in mind that failing to support expected payment methods can lead to frustrated customers and potentially result in lost sales.

4. Ease of integration

Consider how easily the payment gateway can be integrated with your website, mobile apps, or other platforms. Look for gateways that provide well-documented APIs, SDKs, and plugins for popular Complete Merchant Solutions (CMS). This ensures a smooth integration process and reduces development time.

5. Security

Security is paramount in payment processing. Ensure that the payment gateway complies with industry-standard security features and protocols, such as PCI DSS (Payment Card Industry Data Security Standard). Data security should be a top priority to protect both your business and your customers’ sensitive information. Razorpay takes security as an utmost priority with compliances to all security measures and protocols.

6. Customer Experience

A seamless and intuitive checkout experience is essential for preventing cart abandonment and ensuring customer satisfaction. When evaluating payment gateways, consider how the gateway integrates with your website or application and assess the overall user experience it provides.

Look for a payment gateway that minimises redirects and keeps the payment process smooth and straightforward. Redirects can be confusing for customers and may lead to abandoned transactions. A well-designed payment gateway should provide a clear and user-friendly interface, guiding customers through the checkout process with ease.

7. Internation Transactions Support

If your business caters to an international customer base, it’s crucial to choose a payment gateway that supports multiple currencies and global payment methods. This ensures that customers from different regions can complete transactions using their preferred payment options, enhancing their overall experience and increasing the likelihood of successful sales.

When evaluating payment gateways for global transactions, consider factors such as currency conversion rates, cross-border transaction fees, and the gateway’s ability to handle different payment methods commonly used in your target markets. A gateway with robust global transaction capabilities can help you expand your business reach and tap into new markets effectively.

8. Fraud Detection

Protecting your business and customers from fraudulent activities is of utmost importance. When choosing a payment gateway, look for providers that offer built-in fraud prevention tools to help detect and mitigate potential risks.

Features such as IP tracking, geolocation, and advanced algorithms can help identify suspicious transactions and prevent payment fraud. These tools analyse various data points, such as the customer’s location, device information, and transaction patterns, to flag potentially fraudulent activities and take appropriate actions.

By selecting a payment gateway with strong fraud detection capabilities, you can minimise the risk of financial losses and protect your business reputation. Additionally, robust fraud prevention measures can help build customer trust and confidence in your brand, as they feel secure when making transactions on your platform.

9. Reliability

The reliability of your payment gateway is crucial for ensuring uninterrupted payment processing and maintaining customer trust. When evaluating potential gateways, consider their uptime guarantees and track record of system stability.

Frequent outages or downtime can disrupt your ability to accept payments, leading to frustrated customers and lost sales. Look for payment gateways that offer high uptime guarantees, typically above 99%, to minimise the risk of service interruptions.

Additionally, research the gateway’s reputation for reliability and read reviews from other businesses to gain insights into their experiences. A payment gateway with a proven track record of stability and minimal downtime can provide peace of mind and ensure that your payment processing remains smooth and uninterrupted.

10. Easy checkout on mobile and other devices

Given the increasing prevalence of mobile transactions, the payment gateway must offer a seamless checkout experience on mobile devices. Mobile optimisation enhances user satisfaction and conversion rates. Interestingly, since its establishment in 2016, it took four years for the monthly UPI transaction value to exceed Rs 3 lakh crore (by September 2020); remarkably, within just one more year, this value more than doubled to reach Rs 7 lakh crore.

11. Hosted vs. non-hosted payment gateway

Decide whether you want a hosted or non-hosted payment gateway. Hosted gateways redirect customers to the payment provider’s site for processing, while non-hosted gateways allow customers to complete transactions on your website. The choice depends on your preferences, branding, and security requirements.

Still unsure about the type of payment gateway that fits your business needs? Explore in detail about types of payment gateway.

12. Recurring billing Feature

For any business model based on subscriptions, memberships, or installment plans, a built-in recurring billing feature is non-negotiable. This capability automates the entire subscription lifecycle, from regular payment collection to sending invoices, significantly reducing administrative workload and manual errors.

More importantly, it is a cornerstone of customer retention. A seamless, automated billing process prevents “involuntary churn”—where customers are lost due to a forgotten payment or an expired card. Look for gateways with smart dunning management, which can automatically retry failed payments and notify customers of issues, protecting your revenue stream and ensuring a frictionless experience that keeps your subscribers satisfied.

13. Transaction limits

It’s crucial to look beyond the advertised transaction fees and examine the fine print on transaction limits. These caps, put in place by gateways for risk management, can directly impact your revenue potential. A standard gateway might impose a per-transaction limit of ₹25,000 to ₹1,00,000 or a total daily processing volume cap.

This becomes critical for certain business models. If you sell high-value items like electronics or furniture, or handle large B2B invoices, a low single-transaction limit will result in failed payments and a frustrating customer experience. Conversely, a business relying on high-volume micropayments needs to ensure the gateway’s infrastructure can handle the load without imposing restrictive monthly caps. Before committing, verify that both the per-transaction and total volume limits align with your current sales and, more importantly, your future growth projections.

14. Onboarding timeline

The time it takes to get your payment gateway operational is a direct factor in how quickly you can start generating revenue. While many modern platforms advertise “instant” or same-day setup, the reality can be quite different depending on your business complexity.

Recent industry data shows the onboarding process can stretch from a few business days to several weeks. A 2023 study found that it took banks an average of 95 days to complete a Know Your Customer (KYC) review for a corporate client, a 13% increase from the previous year. While a sole proprietor might get approved quickly, a registered company will face a more rigorous verification process requiring business documents, director IDs, and bank statements.

Delays in this KYC process are a major bottleneck. In fact, some reports indicate that nearly half (48%) of banks have lost clients due to slow and inefficient onboarding. Choose a provider known for a transparent and efficient onboarding process to avoid significant delays that could stall your business launch or expansion.

15. Settlement period

The settlement period—the time it takes for money from a customer’s transaction to land in your business bank account—is a critical factor for your financial health. In India, the standard has long been T+2 or T+3 days (the transaction day plus two or three business days). However, the market is evolving, and many leading gateways now offer faster options like T+1 or even same-day settlement, sometimes for a nominal fee.

For small and medium-sized enterprises (SMEs), this timeline is not a trivial detail; it’s the lifeblood of the business. A long settlement cycle can severely constrain your working capital, making it difficult to manage inventory, pay suppliers, or invest in growth. Considering that a staggering 82% of small business failures are attributed to poor cash flow management, choosing a gateway with a faster settlement period can provide a significant competitive advantage and build operational resilience.

16. Customisation and branding

You must evaluate the gateway’s ability to provide a seamless, branded checkout experience. When a customer clicks “buy,” the payment page should feel like a natural extension of your website, not a jarring redirect to an unfamiliar third-party site. A lack of visual consistency can break trust at the most critical moment.

• Hosted vs. Integrated: A basic gateway might redirect users to a standard, hosted payment page. A superior option offers an integrated or embedded checkout (using APIs or iFrames) that keeps the customer on your domain, with your branding, throughout the process.
• Impact on Conversions: The impact of this is measurable. Industry data from the Baymard Institute shows that 19% of shoppers abandon their carts simply because they “didn’t trust the site with their credit card information.” A professionally branded, secure-looking checkout page is essential to overcome this hesitation. Streamlining the user experience through better design and branding can lift conversions by over 35%.

17. Reporting and analytics

A payment gateway should be more than a simple transaction processor; it should be a source of valuable business intelligence. Modern gateways offer powerful dashboards that move beyond basic sales figures and provide actionable insights to drive strategy.

Instead of just seeing a total revenue number, look for a provider that allows you to:

• Track Transaction Health: Monitor real-time transaction success and failure rates to instantly identify and address payment issues.
• Analyse Customer Behaviour: Understand which payment methods (UPI, cards, wallets) are most popular, identify peak purchasing hours, and see sales trends by region.
• Simplify Reconciliation: Get detailed, automated reports that make matching payments, fees, and settlements effortless, saving countless hours of manual accounting work.

Related Read: Difference Between Payment Gateway & Payment Processor

What do you need to start accepting payments?

To initiate the process of accepting payments for your business, there are several key components that you must have in place. When choosing a payment gateway, these essential elements must be considered:

Merchant account

A merchant account is a special bank account that lets businesses take different kinds of payments, mostly credit and debit cards. It works as a middleman where customer money is held briefly before going to your business bank account.

Business bank account

A dedicated business account acts as the ultimate repository for funds gathered from customer transactions, ensuring systematic organisation and effective management. It stands as an essential platform for securely centralising the proceeds originating from your merchant account activities.

Payment Gateway

A payment gateway is a secure online platform that facilitates the transfer of transaction data between your website or application and the payment processor. It encrypts sensitive information to ensure the safety of customer data during online transactions.

Payment Processor

The payment processor is responsible for authorising and executing the payment transactions. It works closely with the payment gateway to ensure seamless and secure fund transfers.

Related Read: What Is a Payment Processor? How It Works With Example

Types of Merchant Accounts:

• Retail merchant account

  Retail merchant accounts are tailored for businesses with brick-and-mortar stores, facilitating in-person cashless transactions with their customers. Owners of such accounts utilise a payment terminal, commonly known as a point-of-sale (POS) system, to efficiently process card payments through a physical network.

• E-commerce merchant accounts

  An e-commerce or online merchant account is custom-made for businesses running web stores, seamlessly enabling cashless transactions via websites or mobile apps. These finely-tuned accounts ensure the utmost security during transaction handling, seamlessly processing them in real time. This empowerment allows e-commerce enterprises to gracefully embrace credit, debit, and ACH payments from customers exploring their products on smartphones, tablets, or computers.

• Mobile merchant account

  Mobile merchant accounts offer the ease of on-site card transactions, effortlessly processing payments via portable POS systems or mobile devices. Unlike conventional wired card terminals, these solutions embrace wireless technology, ensuring agility and freedom of movement. Especially beneficial for businesses with ever-changing venues, this merchant account type provides a secure and uncomplicated means of collecting card payments at any location for the day.

How Razorpay Payment Gateway Can Help Your Business?

Razorpay Payment Gateway is a comprehensive solution that adheres to the key considerations outlined above. With Razorpay, you can:

• Benefit from competitive transaction fees and volume-based pricing to optimise costs.
• Accept a wide range of payment methods, including credit/debit cards, net banking, UPI, and popular digital wallets.
• Provide a seamless, mobile-friendly checkout experience to improve customer satisfaction.
• Process international transactions with support for multiple currencies and global payment methods.
• Leverage advanced fraud detection tools and tokenisation to ensure secure transactions and minimise payment fraud.
• Enjoy high uptime and reliability, backed by robust infrastructure and 24/7 customer support.
• Easily integrate the gateway with your existing website or e-commerce platform using simple APIs and plugins.

By choosing Razorpay Payment Gateway, you can streamline your payment processes, enhance security, and provide a superior customer experience, ultimately driving business growth and success.

Conclusion

Choosing the right payment gateway is a critical decision that can significantly impact your business’s success. By considering factors such as cost, security, integration, customer support, and other essential aspects, you can make an informed choice that aligns with your business needs and goals. 

Whether you are a small startup or an established enterprise, a well-chosen payment gateway can streamline your payment processes, enhance customer satisfaction, and contribute to your business’s growth.

FAQs

1. Can I have multiple payment gateways on my website?

Yes, it’s possible to integrate multiple payment gateways on your website. This allows you to offer diverse payment options to your customers, enhancing convenience and accommodating different preferences. However, managing multiple gateways requires careful setup and coordination to ensure a seamless experience and efficient transaction processing.

2. What is an example of a payment gateway?

Merchants can choose from different types of payment gateways, namely hosted, self-hosted, API-hosted and local bank integration payment gateway. Razorpay is an example of an API-hosted payment gateway that is widely used for online transactions in India.

3. What are the types of payment gateways?

There are four payment gateway types, each with distinct features. Hosted gateways redirect customers, ensuring security and compliance. Self-hosted offers control and speedy checkout, whereas, API-hosted provides customisation and integration ease. Local bank gateways redirect to bank sites but lack scalability.

4. Is payment gateway legal in India?

Yes, payment gateways are legal and widely used. They facilitate online transactions and are integral to e-commerce and digital payment systems. Payment gateways operate under the regulatory framework of the RBI and must adhere to compliance standards and data security protocols to ensure safe and secure electronic transactions

5. Do banks use payment gateway?

Banks collaborate with payment gateway providers to deliver secure and smooth online transactions, improving the overall banking experience by guaranteeing payment security and reliability for their clients.

6. How long does it take to integrate a payment gateway?

Payment gateway integration duration fluctuates based on factors like gateway choice, website platform, and complexity. Typically, it spans days to weeks. Collaboration with your team and the provider ensures a seamless, timely process.