Key Takeaways
- API integrations offer maximum customisation and control but require significant development resources and ongoing maintenance.
- Hosted checkout solutions get businesses accepting payments faster with minimal code, but limit design flexibility.
- The right payment integration choice depends on your team’s technical capacity, product requirements, and growth stage.
- Many scaling businesses use hybrid approaches, going for hosted checkout initially before migrating to API gateway integration as they mature.
- Understanding different types of payment gateway integrations helps product teams make informed architecture decisions.
Your startup just closed its seed round. The product’s ready, customers are waiting, and now you need to actually collect money. The CTO opens the payment provider’s documentation and immediately hits a fork in the road: API gateway integration or hosted checkout?
This decision seems technical—and it is—but it carries implications that reach far beyond the engineering team, for the simple fact that the checkout experience affects conversion rates. The payment integration architecture influences how quickly you can add features later, and the maintenance burden affects what else your developers can work on.
For tech teams building products meant to scale, understanding the different types of payment gateway integration approaches—and their real-world tradeoffs—makes for better decisions. Let’s get into it.
Hosted Checkout: Speed Over Customisation
A hosted checkout does exactly what the name suggests: the payment provider hosts the checkout experience. When customers reach the payment step, they’re redirected to a page controlled by the provider (or see an embedded iframe), complete their payment there, and return to your site.
Why Teams Choose Hosted
The primary draw of a hosted checkout integration is its speed to market, which can be days rather than weeks. Copy a few lines of code, configure some settings in a dashboard, and you’re live. There’s no need to handle sensitive card data directly, which simplifies PCI compliance considerably.
For early-stage startups, this matters enormously, as every week spent building payment infrastructure is a week not spent on core product features. When you’re racing to find product-market fit, that tradeoff calculation is straightforward.
Hosted also shifts the security burden to the payment provider, which handles the heavy lifting for encryption, tokenisation, and fraud checks. Your team doesn’t need deep payments expertise to implement safely.
The Limitations
As hosted checkout passes payment processing to a provider, this limits your control and your ability to customise. In practice, your checkout page looks like your provider’s, and you may only be able to adjust colours, logos, and some text.
Also, the redirect experience can feel jarring for customers as they leave your site, enter payment details on a different domain, then return. Conversion rate optimisation becomes harder when you don’t control the entire funnel.
For platforms or marketplaces with complex payment flows—such as split payments, escrow, or conditional releases—hosted solutions often also can’t accommodate the required logic.
API Integration: Control at a Cost
API gateway integration means building the checkout experience yourself, using the payment provider’s APIs to process transactions behind the scenes. This payment integration method means customers never leave your site, and every element, like forms, buttons, error messages, and flow logic, is yours to design.
Why Teams Choose API
APIs offer customisation without limits, whether it’s a single-page checkout that validates in real time or a checkout embedded seamlessly into your app’s design language. Flexibility is another plus, as you can freely A/B test different payment flows.
For product-led companies where checkout is a competitive differentiator, this control justifies the investment. For instance, a subscription service might implement dynamic pricing displayed during checkout, or a marketplace might show seller information alongside payment options. These experiences require API-level access.
APIs also contain the building blocks for complex business logic, enabling conditional payment routing, custom retry strategies, and integration with internal systems.
The Costs
As API gateways are managed by your side, development time is a major cost. A proper API gateway integration might take 4-8 weeks of engineering effort for initial implementation, plus ongoing maintenance.
Then there is PCI compliance complexity. If you’re handling raw card data (even briefly), your compliance scope expands significantly. Most teams mitigate this with client-side tokenisation, where cards are tokenised in the browser before they reach your servers, but this approach requires care.
API integration also has an opportunity cost: the engineering hours spent perfecting checkout could have been spent building features that differentiate your product. For some companies, that’s a poor trade.
What Actually Scales Better?
Depending on what you’re scaling, both types of payment gateways can provide “scalability” in different ways.
Transaction Volume Scaling
Both approaches handle transaction volume growth just fine. Whether you process 100 or 100,000 transactions monthly, the payment provider’s infrastructure does the heavy lifting. Your integration method doesn’t materially affect this.
Feature Scaling
This is where differences emerge. Adding new payment methods with a hosted checkout usually means a quicker, more seamless process (e.g., toggling settings in a dashboard), whereas with API integration, each new method might require development work.
Even so, APIs provide much greater flexibility for adding custom functionality, such as implementing one-click purchasing for returning customers, custom subscription management, or integration with your loyalty programme. These require API access, while options for hosted checkout depend on your provider.
Team Scaling
API integrations are more manageable for growing teams, as more hands mean it’s easier to distribute the maintenance burden. Conversely, APIs can be a significant distraction for smaller teams as you have fewer developers, who will be preoccupied with building the base system.
Geographic Scaling
Expanding across regions requires diverse payment methods. Each market has preferred local methods, and hosted checkout solutions from regional providers often bundle multiple ones together, simplifying multi-market launches.
In contrast, API integrations require evaluating each market’s requirements and implementing accordingly. The tradeoff is more work for the increased control you maintain.
Tips for Choosing Your Ideal System
There’s no universal answer for which is best, but where you are in your business stage can factor into your decision:
- Early stage (pre-product-market fit): Hosted checkout almost always. You get payments working sooner, and can focus engineering on the core product. You can migrate later.
- Growth stage (scaling with validated product): Evaluate whether checkout experience is a differentiator. If customers complain about payment friction or you’re losing conversions at checkout, an API migration might return the investment. If payments “just work,” keep the hosted solution.
- Scale stage (established, optimising everything): API integration typically makes sense by this point, especially if you have the engineering capacity. Marginal improvements in checkout conversion deliver meaningful revenue impact at volume.
Make the Right Payment Integration Choice Today
Between API gateways and hosted checkouts, the right decision largely comes down to what fits your current reality. If your team and business are in the early stage, hosted checkout offers speed and simplicity, whereas API integration can unlock competitive advantages if you have the engineering capacity. Most successful businesses start simple and migrate as checkout experience becomes a priority.
Get flexibility across both approaches with Razorpay, where you can start with pre-built checkout experiences to go live quickly, then graduate to full API access as your product matures. With sandbox environments and documentation for practical testing, our platform’s partnerships with MAS-licensed entities ensure compliance regardless of which integration path you choose.
Wait no more, for teams evaluating different types of payment gateway integrations, Razorpay provides the flexibility to start with hosted checkout and scale to API integration when you’re ready.
References:
- What Is an iFrame? A Complete Guide to Embedding Content on Your Website. Oct 23, 2025. Elementor. Retrieved on 5th February 2026 from https://elementor.com/blog/what-is-an-iframe/
FAQs
Q1: What is the difference between API and hosted checkout?
Hosted checkout redirects customers to the payment provider’s page to complete payment, requiring minimal development. API gateway integration lets businesses build custom checkout experiences within their own site, offering full control but requiring more development resources.
Q2: Which is better for startups: API or hosted checkout?
For most early-stage startups, hosted checkout is preferable. It minimises development time and lets teams focus on core product features. API integration makes more sense when checkout customisation becomes a competitive differentiator.
Q3: Does hosted checkout affect conversion rates?
It can. The redirect experience may feel less seamless than a fully integrated checkout. However, well-designed hosted checkouts from reputable providers are optimised for conversion, and the difference may be minimal for many businesses.
Q4: Can I switch from hosted checkout to API integration later?
Yes. Many businesses start with hosted checkout for speed, then migrate to API integration as they scale, and the checkout experience becomes more critical. Choose a payment provider that supports both approaches to make future migration smoother.
