Know about the Different Types of Payment Gateways

Know about the Different Types of Payment Gateways

8 February, 2024

In today's digital era, payment gateways have become essential to e-commerce businesses. They act as the bridge between the customer and the merchant, facilitating secure and seamless online payments. However, not all payment gateways are created equal. In this blog post, you will explore the different types of payment gateways, their features, and pros and cons. Keep reading.

Types of Payment Gateways

Different types of Payment Gateway operate uniquely to safeguard and relay crucial transactional information among merchants, cardholders, and payment processors. When a cardholder inputs their Credit/Debit Card details into a Payment Gateway, it encrypts the data, verifies card authenticity, and then transmits the details to the acquirer to complete the transaction.

As an e-commerce business owner looking to integrate a Payment Gateway into your website or smartphone app, choosing the right one is crucial. Below are the four types of Payment Gateways, their features, and their pros and cons.

1. Hosted Payment Gateways

Hosted Payment Gateways redirect customers from the merchant website to a secure page hosted by the Payment Service Provider (PSP) to complete the transaction. Upon clicking the hosted Payment Gateway link, the customer is redirected to the PSP page, where they can enter their card details to complete the transaction. Once the transaction is complete, they are again redirected to the merchant page to complete the check-out process.

Advantages of Hosted Payment Gateways:

  • As they are hosted by third-party PSPs, merchants need to put in minimum effort

  • Transactions are PCI-compliant and safeguard customers against fraud

  • They are easy to integrate into a business website or smartphone app

  • There are fewer chances of downtime or technical issues while making payments

Limitations of Hosted Payment Gateways:

  • As the Payment Gateway is hosted on a third-party page, the merchant has no control over the user experience

  • Businesses get limited or no marketing opportunities on the Payment Gateway page

2. Seamless Payment Gateways

Seamless Payment Gateways allow merchants to process payments directly on their website without redirecting customers to an external page. They enable businesses to retain complete control over the entire payment procedure. The customers need to enter their card details on the merchant's website. These details are then encrypted and shared with the PSP for further processing.

Advantages of Self-Hosted Payment Gateways:

  • Facilitates faster check-out process for customers

  • Businesses have full control over the user data and experience

  • They can be customised as per the business requirements

Limitations of Self-Hosted Payment Gateways:

  • There is no technical support team for the PSP to assist in case of a payment failure. Businesses may have to deal with such situations themselves

  • They entail higher set-up and maintenance costs

  • Merchants need to ensure the security of sensitive data and regulatory compliance
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While selecting an appropriate Payment Gateway for your business, you can consider factors such as security, user-friendliness, and implementation costs. Understanding the different Payment Gateways can help you make an informed decision as per the unique needs of your business and customers. HDFC Bank offers Payment Gateway solutions to suit your business requirements. Click here for more details.

*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. HDFC Bank SmartHub Vyapar is available to only Individual & Sole Proprietorship entity and for select Current Account variants only. For other entity types, please connect with the nearest branch.

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