{"id":13618,"date":"2026-02-19T18:04:52","date_gmt":"2026-02-19T12:34:52","guid":{"rendered":"https:\/\/razorpay.com\/blog\/?p=13618"},"modified":"2026-03-02T15:54:17","modified_gmt":"2026-03-02T10:24:17","slug":"different-types-of-payment-gateway","status":"publish","type":"post","link":"https:\/\/razorpay.com\/blog\/different-types-of-payment-gateway\/","title":{"rendered":"Types of Payment Gateway in E-commerce: A Complete Guide for Indian Businesses"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">In today&#8217;s digital world, online payments have become interwoven into the fabric of our lives, transforming the way we engage with products and services. The payment process must be user-friendly and secure, ensuring customer confidence and comfort during transactions, and prioritising a seamless experience.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Different types of payment gateways support <a href=\"https:\/\/razorpay.com\/learn\/what-is-online-transaction\/\">online transactions<\/a>. So, which payment gateway should you opt for? We will answer this question and more in this blog.<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d2139e236a0\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d2139e236a0\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/blog\/different-types-of-payment-gateway\/#What_is_a_Payment_Gateway\" >What is a Payment Gateway?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/blog\/different-types-of-payment-gateway\/#Key_takeaways\" >Key takeaways<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/blog\/different-types-of-payment-gateway\/#4_Different_Types_of_Payment_Gateway\" >4 Different Types of Payment Gateway<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/blog\/different-types-of-payment-gateway\/#1_Hosted_payment_gateway\" >1. Hosted payment gateway<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/blog\/different-types-of-payment-gateway\/#2_API-hosted_payment_gateway\" >2. API-hosted payment gateway<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/blog\/different-types-of-payment-gateway\/#3_Self-hosted_payment_gateway\" >3. Self-hosted payment gateway<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/razorpay.com\/blog\/different-types-of-payment-gateway\/#4_Local_Bank_integration_gateway\" >4. Local Bank integration gateway<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/razorpay.com\/blog\/different-types-of-payment-gateway\/#Differences_between_the_four_payment_gateways\" >Differences between the four payment gateways<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/razorpay.com\/blog\/different-types-of-payment-gateway\/#Considerations_for_Choosing_the_Right_Payment_Gateway\" >Considerations for Choosing the Right Payment Gateway<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/razorpay.com\/blog\/different-types-of-payment-gateway\/#Differences_Between_Payment_Aggregators_and_Payment_Gateways\" >Differences Between Payment Aggregators and Payment Gateways<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/razorpay.com\/blog\/different-types-of-payment-gateway\/#Related_Read_Multiple_Payment_Gateways_101_What_Is_It_How_it_Works\" >Related Read: Multiple Payment Gateways 101: What Is It &amp; How it Works?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/razorpay.com\/blog\/different-types-of-payment-gateway\/#Frequently_asked_questions_FAQs\" >Frequently asked questions (FAQs)<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What_is_a_Payment_Gateway\"><\/span><b>What is a Payment Gateway?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">A <a href=\"https:\/\/razorpay.com\/payment-gateway\/\">payment gateway<\/a> serves as a secure online technology that connects your customers&#8217; <a href=\"https:\/\/razorpay.com\/blog\/electronic-payment-system\/\">electronic payment methods<\/a> to your bank, ensuring smooth and secure transactions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Payment gateways ensure <a href=\"https:\/\/razorpay.com\/blog\/secure-electronic-transaction-set\/\">secure digital transactions<\/a>, prompt payments, and reduced cash-on-delivery costs for merchants. They also offer data collection, analysis, and actionable insights for smarter marketing strategies and SKU management.<\/span><\/p>\n<div style=\"border-left: 4px solid #0073aa; background: #f0f8ff; padding: 15px; margin: 20px 0; border-radius: 5px;\">\n<h2 style=\"color: #0073aa; font-size: 18px; margin: 0 0 8px 0; display: inline-block;\"><span class=\"ez-toc-section\" id=\"Key_takeaways\"><\/span>Key takeaways<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul style=\"display: inline-block; margin: 0 0 0 10px; padding-left: 18px; vertical-align: top;\">\n<li>A payment gateway is a technology that securely connects your website or app to banks and payment networks, enabling customers to complete online transactions safely.<\/li>\n<li>There are four main types of payment gateways used by businesses: Hosted gateways, Self-hosted gateways, API-hosted gateways, and Local bank integration gateways, each offering different levels of control, security, and checkout experience.<\/li>\n<li>Hosted payment gateways redirect customers to a third-party payment page for processing, making them easier to implement and highly secure for merchants.<\/li>\n<li>API-hosted and self-hosted gateways allow businesses to integrate payments directly into their website or app, offering a smoother checkout experience and greater customisation.<\/li>\n<li>Choosing the right payment gateway type helps businesses optimise checkout experience, improve payment success rates, and scale online transactions efficiently.<\/li>\n<\/ul>\n<\/div>\n<p><strong>Read in Detail: <a href=\"https:\/\/razorpay.com\/blog\/payment-gateway-101\/\">What is a Payment Gateway and How it Works?<\/a><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"4_Different_Types_of_Payment_Gateway\"><\/span><b>4 Different Types of Payment Gateway<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p class=\"css-cyvn9x\">As you consider to opt for the best payment gateway for your website or app, think about your business needs and infrastructure.<\/p>\n<p class=\"css-cyvn9x\">The main difference between the four types of payment gateway is how you integrate them to your website. Some may require continuous maintenance and technical support, while some may offer support from the host right away.<\/p>\n<p class=\"css-cyvn9x\">The four different types of payment gateway are:<\/p>\n<ul class=\"css-1u5309q\">\n<li class=\"css-s3svv2\">\n<p class=\"css-cyvn9x\">Hosted Payment Gateway<\/p>\n<\/li>\n<li class=\"css-s3svv2\">\n<p class=\"css-cyvn9x\">API-hosted Payment Gateway<\/p>\n<\/li>\n<li class=\"css-s3svv2\">\n<p class=\"css-cyvn9x\">Self hosted Payment Gateway<\/p>\n<\/li>\n<li class=\"css-s3svv2\">\n<p class=\"css-cyvn9x\">Local bank integration Payment Gateway<\/p>\n<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"1_Hosted_payment_gateway\"><\/span><b>1. Hosted payment gateway<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">A hosted payment gateway is a <a href=\"https:\/\/razorpay.com\/blog\/what-is-payment-processing\/\">payment processing<\/a> solution where a third-party service provider hosts the payment system for your businesses, post which you integrate the payment system onto your websites or mobile application.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When the customer is prepared to make a purchase, they simply click on a &#8216;buy now&#8217; link, which then leads them to the host or <a href=\"https:\/\/razorpay.com\/blog\/what-is-a-payment-service-provider\/\">payment service provider<\/a> (PSP) page.<\/span><\/p>\n<h3><b>How Hosted Payment Gateway Works<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">When a customer initiates a payment, the hosted payment gateway processes the transaction securely on its servers, handling the payment details, and then sends the transaction status back to the business&#8217;s website or app.<\/span><\/p>\n<h3><b>Key Components<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The hosted payment gateway<\/span> <span style=\"font-weight: 400;\">comprises the merchant&#8217;s website or app, the hosted payment gateway service, and the <a href=\"https:\/\/razorpay.com\/blog\/payment-processor\/\">payment processor<\/a>. The payment gateway service provider handles the security and processing aspects.<\/span><\/p>\n<h3><b>When to Use Hosted Payment Gateway<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">In an online store with a hosted payment gateway, customer transactions are securely processed on the gateway&#8217;s servers, guaranteeing data security and compliance. This offloads <a href=\"https:\/\/razorpay.com\/blog\/payment-security-types-explained\/\">payment security<\/a> and compliance duties from the business, ensuring seamless transactions and prompt payments.<\/span><\/p>\n<h4><b>Pros:<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Hosted payment gateways, usually <a href=\"https:\/\/razorpay.com\/blog\/what-is-pci-dss-compliance\/\">PCI DSS<\/a> compliant, provide businesses with a secure, user-friendly solution for accepting payments and simplifying compliance and development efforts.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Integrating a hosted payment gateway is often straightforward. You typically need to embed a code or use a plugin\/module for your e-commerce platform, and you are ready to accept payments.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Hosted payment gateways are maintained by dedicated service providers, ensuring high uptime and reliability. This means fewer instances of downtime or technical issues affecting your payment processing.<\/span><\/li>\n<\/ul>\n<h4><b>Cons:<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The redirection of customers to a payments gateway page might impact the overall customer experience.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Businesses get limited branding opportunities on the final payments page hosted by the payment gateway.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"2_API-hosted_payment_gateway\"><\/span><b>2. API-hosted payment gateway<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">An API-hosted payment gateway is a payment gateway that processes payments through an Application Program Interface (API), thereby enabling customers to stay on the merchant&#8217;s website throughout the checkout experience.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">API hosted payment gateway offers a fully <a href=\"https:\/\/razorpay.com\/docs\/payments\/payment-gateway\/web-integration\/custom\/\">customisable checkout experience<\/a> and can be integrated into a variety of systems, including mobile. As a merchant, you are in complete control of the website design, and are responsible for the end-to-end security of transactions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To ensure security, you must<\/span><span style=\"font-weight: 400;\"> invest in resources like SSL certification to secure sensitive data and ensure compliance with stringent security standards like PCI DSS. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">A good example of an API-hosted payment gateway is Razorpay. It has platform-specific features like customization and ease of diverse integration needs for <a href=\"https:\/\/razorpay.com\/integrations\/\">websites, mobile apps, CMS-based plug-ins<\/a>, industry-specific features for startups, small businesses, e-commerce, and a <a href=\"https:\/\/razorpay.com\/blog\/best-payment-gateway-india\/\">host of other features<\/a>. <\/span><span style=\"font-weight: 400;\">This effectively leads to Checkout Process Optimization as the API payment gateway streamlines the checkout experience effectively and enables customers to effortlessly complete their purchases.<\/span><\/p>\n<h3><b>How API-hosted payment gateway works?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">When a customer initiates a payment, the API-hosted payment gateway processes the transaction by securely transmitting payment data to the payment processor and then back to the website or app to confirm the transaction&#8217;s status.<\/span><\/p>\n<h3><b>Key Components<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The API-hosted payment gateway consists of three main components: the merchant&#8217;s website or app, the payment gateway provider&#8217;s API, and the payment processor. The API acts as a bridge between the website\/app and the payment processing infrastructure.<\/span><\/p>\n<h3><b>When to Use API-hosted payment gateway?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Imagine an e-commerce website that integrates an API-hosted payment gateway. When a customer makes a purchase, the API securely transmits the payment details to the payment processor, authorises the payment, and returns the result to the website. Customers complete purchases, and businesses receive prompt payments, ensuring data security and PCI DSS compliance in this seamless process.<\/span><\/p>\n<h4><b>Pros:<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Both the payment details and processing are handled on the merchant&#8217;s website.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Customers get a seamless payment experience as they don&#8217;t have to leave the merchant&#8217;s website to complete the transaction.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">With <a href=\"https:\/\/razorpay.com\/docs\/api\/basics\/\">API integration<\/a>, businesses can scale their payment processing as their operations grow, without significant disruptions or changes to their checkout flow.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">These gateways often support a wide range of currencies and payment methods, enabling businesses to cater to a global customer base.<\/span><\/li>\n<\/ul>\n<p style=\"text-align: center;\"><strong>Related Read: <a href=\"https:\/\/razorpay.com\/blog\/different-types-of-payment-methods\/\">What are Different Types of Payment Methods?<\/a><\/strong><\/p>\n<h4><b>Cons:<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">API integration between the merchant and payment gateway necessitates a certain level of technical expertise in areas such as programming, web development, and data security.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Merchants must invest in resources to secure sensitive data adequately, ensuring compliance with stringent security standards. This added responsibility can pose challenges for businesses aiming to maintain robust payment security.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"3_Self-hosted_payment_gateway\"><\/span><b>3. Self-hosted payment gateway<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">A self-hosted payment gateway is a solution that empowers businesses to effectively and securely maintain full control over the entire payment process. With the self-hosted approach, merchants manage and execute payment transactions directly within their infrastructure, ensuring a secure, customized and accountable payment journey.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Self hosted payment gateways allow businesses to tailor and control the entire checkout process according to their specific requirements which may include branding and user experience goals. In a self-hosted setup, the ownership and custody of payment information, such as credit card details or <a href=\"https:\/\/razorpay.com\/blog\/digital-wallet\/\">digital wallet<\/a> data, remain firmly within the merchant&#8217;s purview. This minimizes reliance on third-party providers and strengthens data ownership and security.<\/span><\/p>\n<h3><b>How Self hosted payment gateway works?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">When a customer initiates a payment, the self-hosted payment gateway processes the transaction within the business&#8217;s environment, from collecting payment details to transmitting them to the payment processor.<\/span><\/p>\n<h3><b>Key Components<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Self-hosted payment gateway involves the merchant&#8217;s website or app, a self-hosted payment gateway software, and a connection to the payment processor. The business takes responsibility for securing the payment data.<\/span><\/p>\n<h3><b>When to Use Self-Hosted Payment Gateway?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">A large enterprise, prioritising security and compliance, chooses a self-hosted payment gateway. They maintain control over payment data, minimising data exposure risk. This approach, while demanding more security responsibility, aligns with their stringent security policies and compliance requirements.<\/span><\/p>\n<h4><b>Pros:<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Businesses have control over consumer and transaction data.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Self-hosted gateways offer customisation, aligning the payment platform precisely with a company&#8217;s requirements.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">They provide businesses with potential cost savings.<\/span><\/li>\n<\/ul>\n<h4><b>Cons:<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Self-hosted payment gateways require more technical expertise and effort to set up and maintain, making them less user-friendly for merchants without extensive IT knowledge.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Merchants are responsible for ensuring the security of customer payment data, which can be a significant burden in terms of compliance and data protection.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Self-hosted gateways may involve higher initial costs for infrastructure and ongoing maintenance expenses, potentially outweighing the benefits for smaller businesses.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"4_Local_Bank_integration_gateway\"><\/span><b>4. Local Bank integration gateway<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Local bank integration gateway is a <a href=\"https:\/\/razorpay.com\/\">payment processing solution<\/a> that enables businesses to integrate with local banks to facilitate online payments, ensuring seamless and region-specific transaction processing. This primarily serves as an entry-level solution with limited features, often lacking capabilities for returns or recurring payments.<\/span><\/p>\n<h3><b>How Local Bank Integration Gateway Works?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">When a customer initiates a payment, the local bank integration gateway facilitates the transaction by routing payment data to the respective local bank, which processes the payment and returns the result to the business.<\/span><\/p>\n<h3><b>Key Components<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The local bank integration gateway involves the business&#8217;s website or app, the local bank integration gateway software, and connections to local banks. This setup ensures that customers can make payments using local payment methods.<\/span><\/p>\n<h3><b>When to Use Local Bank Integration Gateway?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Imagine an e-commerce platform operating in multiple countries. To enhance user experience and trust, they integrate a local bank integration gateway for each region they serve. Utilising a local bank for payment processing in a customer&#8217;s country can enhance satisfaction and transaction success.<\/span><\/p>\n<h4><b>Pros:<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Seems more trustworthy as the local bank integration gateway<\/span> <span style=\"font-weight: 400;\">caters to the preferences of customers in specific regions by offering payment options they are familiar with.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Lesser transaction fees for merchants, while a local bank integration gateway<\/span> <span style=\"font-weight: 400;\">increases conversion rates for businesses operating in various locales.<\/span><\/li>\n<\/ul>\n<h4><b>Cons:<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Requires high technical skills to integrate banks&#8217; APIs.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Merchants can only provide limited payment options to customers.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Differences_between_the_four_payment_gateways\"><\/span><b>Differences between the four payment gateways<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">All four types of payment gateways are unique in their ways. So, let&#8217;s understand their differences properly based on parameters like flexibility, ease of integration, costs, security and <a href=\"https:\/\/razorpay.com\/learn\/what-is-reconciliation\/\">reconciliation<\/a>:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><\/td>\n<td>\n<p style=\"text-align: center;\"><strong>Hosted payment gateway<\/strong><\/p>\n<\/td>\n<td style=\"text-align: center;\"><strong>API-hosted payment gateway<\/strong><\/td>\n<td style=\"text-align: center;\"><strong>Self-hosted payment gateway<\/strong><\/td>\n<td>\n<p style=\"text-align: center;\"><strong>Local bank integration gateway<\/strong><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td>\n<p style=\"text-align: center;\"><strong>Flexibility of accepting payments<\/strong><\/p>\n<\/td>\n<td>Limited payment options and customisation<\/td>\n<td>Most payment options and customisable payment modes.<\/td>\n<td>Highly flexible with many payment options<\/td>\n<td>Limited to certain banks<\/td>\n<\/tr>\n<tr>\n<td>\n<p style=\"text-align: center;\"><strong>Ease of integration<\/strong><\/p>\n<\/td>\n<td>Easiest to integrate<\/td>\n<td>Slight technical skills<\/td>\n<td>Highly complex<\/td>\n<td>Complexity depends on banks&#8217; APIs<\/td>\n<\/tr>\n<tr>\n<td>\n<p style=\"text-align: center;\"><strong>Speed<\/strong><\/p>\n<\/td>\n<td>Swift integration and payment collection<\/td>\n<td>Can offer the fastest processing, depending on the merchant&#8217;s website<\/td>\n<td>Depends on the merchant&#8217;s servers, which could be on the slower side<\/td>\n<td>The bank&#8217;s responsiveness determines speed. Could be the slowest of all.<\/td>\n<\/tr>\n<tr>\n<td>\n<p style=\"text-align: center;\"><strong>Costs<\/strong><\/p>\n<\/td>\n<td>Low setup, ongoing commissions, affordable start<\/td>\n<td>Generally no set-up or integration costs, and lower commissions<\/td>\n<td>High setup, maintenance, customisation investment<\/td>\n<td>High costs due to multiple APIs<\/td>\n<\/tr>\n<tr>\n<td>\n<p style=\"text-align: center;\"><strong>Security and Compliance<\/strong><\/p>\n<\/td>\n<td>Provider ensures protocols and security methods such as PCI DSS, SSL, etc<\/td>\n<td>High security, compliance with gateway service<\/td>\n<td>Merchant security, compliance challenges potential<\/td>\n<td>Secure pages, bank-wise compliance complexities<\/td>\n<\/tr>\n<tr>\n<td>\n<p style=\"text-align: center;\"><strong>Success rates<\/strong><\/p>\n<\/td>\n<td><span style=\"font-weight: 400;\">Reliable<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Highest<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Moderate<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Varies from bank to bank<\/span><\/td>\n<\/tr>\n<tr>\n<td>\n<p style=\"text-align: center;\"><strong>Customer service<\/strong><\/p>\n<\/td>\n<td><span style=\"font-weight: 400;\">Generally good support, but limited branding<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Variable support<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Variable<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Variable<\/span><\/td>\n<\/tr>\n<tr>\n<td>\n<p style=\"text-align: center;\"><strong>Easy reconciliation<\/strong><\/p>\n<\/td>\n<td><span style=\"font-weight: 400;\">Simplified process, but limited access to detailed transaction data<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Access to transaction data, but requires data handling, responsibly and securely<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Extensive data access and complex reconciliation<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Local data access, but complex reconciliation<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"Considerations_for_Choosing_the_Right_Payment_Gateway\"><\/span><b>Considerations for Choosing the Right Payment Gateway<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Here are a few factors that merchants must consider before choosing the right payment gateway:<\/span><\/p>\n<h3><b>Ease of integration:<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">One of the foremost considerations when selecting a payment gateway is the ease of integration. The chosen gateway should seamlessly integrate with your website or mobile app. Look for gateways that offer well-documented APIs and plugins for popular e-commerce platforms. A straightforward integration process can save time and resources for your development team.<\/span><\/p>\n<h3><b>Types of payment cards and methods:<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Payment cards come in various types, including credit, debit, and prepaid. Each serves a unique purpose, offering diverse benefits and limitations. When selecting a payment gateway, compatibility with these card types is crucial. Consider factors like transaction fees, security measures, and integration capabilities to ensure seamless and secure transactions for your business and customers.<\/span><\/p>\n<h3><b>Brand trust:<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Brand trust is paramount in the world of online payments. Customers need to feel secure when providing their financial information. Opting for a reputable payment gateway with a strong track record, such as Razorpay, can boost the confidence of your customers. Established brands have a proven history of security and reliability, which can lead to increased trust and conversions.<\/span><\/p>\n<h3><b>Pricing:<\/b><\/h3>\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/razorpay.com\/pricing\/\">Payment gateway pricing<\/a> structures can vary significantly. Evaluate the fees associated with each transaction, including setup fees, monthly fees, and per-transaction charges. Consider your business&#8217;s transaction volume and average transaction value when assessing pricing to ensure the payment gateway<\/span> <span style=\"font-weight: 400;\">aligns with your budget and revenue expectations. Be aware of any hidden fees that might impact your overall costs.<\/span><\/p>\n<h3><b>Availability of documentation:<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The availability of comprehensive documentation is vital for a smooth integration process. Look for a payment gateway that provides well-documented APIs, SDKs, and developer resources. A robust knowledge base and responsive developer support can save your team valuable time when troubleshooting issues or customizing payment flows.<\/span><\/p>\n<h3><b>Seamless onboarding and customer experience:<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">A seamless onboarding process for your business and your customers is essential. The payment gateway should offer a straightforward account setup process, enabling you to start processing payments quickly. The payment process should be user-friendly, secure, and confidence-inspiring for customers.<\/span><\/p>\n<p><em><strong>Tip:<\/strong> Read our detailed guide on <a href=\"https:\/\/razorpay.com\/blog\/how-to-choose-a-payment-gateway\/\">Factors to Consider While Choose a Payment Gateway<\/a><\/em><\/p>\n<h3><b>Other factors:<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Merchants should also consider facts like the global availability of a payment gateway service provider if they want to sell their products or services globally.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Businesses could check a platform&#8217;s mobile performance for completing native or off-page transactions since worldwide most buyers use the internet on their smartphones.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Another factor to look out for before selecting a payment gateway service provider is its fraud protection mechanism.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Differences_Between_Payment_Aggregators_and_Payment_Gateways\"><\/span><b>Differences Between Payment Aggregators and Payment Gateways<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Payment aggregators and payment gateways are both important parts of the online payments ecosystem, but they perform different roles in processing transactions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A payment gateway is primarily a technology layer that securely transmits payment data from the customer to the bank for authorization. In contrast, a payment aggregator is a service provider that allows merchants to accept multiple payment methods and also manages the flow of funds and settlements.<\/span><\/p>\n<h3><b>Key Differences<\/b><\/h3>\n<table>\n<tbody>\n<tr>\n<td><b>Factor<\/b><\/td>\n<td><b>Payment Gateway<\/b><\/td>\n<td><b>Payment Aggregator<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Main role<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Securely transfers payment data between customer, merchant, and bank<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Collects payments from customers and settles them to merchants<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Handling of funds<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Does not hold or manage funds<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Receives and holds funds before settling them to merchants<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Merchant account<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Merchant usually needs a separate merchant account with a bank<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Merchants can start accepting payments without opening a separate merchant account<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Integration<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Businesses may need integrations with banks or processors<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Single integration supports multiple payment methods<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Services offered<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Mainly payment routing and security<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Payment collection, onboarding, settlements, reporting, and compliance<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Typical users<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Large enterprises needing more control over payments<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Startups and SMBs looking for quick onboarding<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Examples<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Bank-owned gateways or dedicated payment gateway providers<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Fintech platforms that provide full payment acceptance solutions<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"Related_Read_Multiple_Payment_Gateways_101_What_Is_It_How_it_Works\"><\/span><b style=\"font-size: 19px; color: rgba(0, 0, 0, 0.74);\">Related Read: <\/b><a style=\"font-size: 19px; font-weight: 400;\" href=\"https:\/\/razorpay.com\/blog\/multiple-payment-gateways\/\"><b>Multiple Payment Gateways 101: What Is It &amp; How it Works?<\/b><\/a><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"Frequently_asked_questions_FAQs\"><\/span><b>Frequently asked questions (FAQs)<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><b>How many types of payment gateway exist?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">There are four types of payment gateways: hosted payment gateway, API-hosted payment gateway, self-hosted payment gateway, and local bank integration gateway.<\/span><\/p>\n<h3><b>Which payment gateway is most popular?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Hosted payment gateway and API-hosted payment gateway are the most commonly used payment gateways across the world as they offer merchants enough resources to focus on their growth, rather than handling payments. They are also affordable and secure, ensuring a pleasant experience for customers.<\/span><\/p>\n<h3><b>What are the advantages and disadvantages of a payment gateway?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">A payment gateway offers numerous advantages to businesses, including an option to accept payments digitally, widen their customer reach, improve customer convenience, and expand business globally.<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\"> On the other hand, payment gateway service could appear as an additional cost, as some payment gateways require technical expertise in integration, management and maintenance.<\/span><\/p>\n<h3><b>How do I choose a payment gateway?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Before selecting a payment gateway, you should consider several factors. For one, you should see how easy it is to integrate their services into your website or app. Further, aspects such as credibility, affordability and availability of documentation should also come into play before you make the final call.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In today&#8217;s digital world, online payments have become interwoven into the fabric of our lives, transforming the way we engage with products and services. The payment process must be user-friendly and secure, ensuring customer confidence and comfort during transactions, and prioritising a seamless experience. Different types of payment gateways support online transactions. So, which payment<\/p>\n","protected":false},"author":122,"featured_media":16465,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[26],"tags":[],"class_list":{"0":"post-13618","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-payments"},"_links":{"self":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/13618","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/users\/122"}],"replies":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/comments?post=13618"}],"version-history":[{"count":10,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/13618\/revisions"}],"predecessor-version":[{"id":26157,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/13618\/revisions\/26157"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/media\/16465"}],"wp:attachment":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/media?parent=13618"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/categories?post=13618"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/tags?post=13618"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}