Technology has brought a lot of advancements in different walks of life, which ultimately provide betterment for the people. E-commerce is among such advancement of the past decade which has completely revolutionized the concept of the online shopping experience. E-commerce comes in all shape and sizes with products, services, or subscription based facilities to the buyers. But one thing remains consistent in every e-commerce store, which is the importance of payment options.

Payment gateways are generally used for e-commerce platforms which are used to accredit the debit or credit payment within the realms of the online world. Unlike conventional payment options such as bank transfer and dealing in physical cash, the payment gateway provides a more secure and quick method for instant payment delivery, keeping the credibility of merchants and their ingenuity.

Since everything is connected through the internet, your credit card, debit card, e-wallets, bitcoins and other payment methods are accessible by banks and financial institutions. The online transaction is secure and is extremely convincing for e-commerce business to use as their payment options.

Since payment options are widely accepted by the masses, it’s important for e-commerce apps to include more than one payment options for your buyers. According to the statistics from Naymard’s Institute, states the average number of cart abandonment ratio for e-commerce platform is 69%, and out of this figure, 27% is due to bad checkout experience and 8% attributes for less number of payment method incorporated into your e-commerce app Thus it is absolutely necessary to understand the different type of payment gateway available at our disposal and the correct one to use from.

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Types of Payment Gateways

Based on the payment process and technology that accompanied with it, there are 6 types of payment gateways used on every e-commerce platform. Below are these 6 types of payment methods along with their advantages and disadvantages to better understand the scope of the technology.

Hosted payment gateway

The hosted payment gateway is ones which use the concept of redirection. This method separates the payment details from the e-commerce platform between two redirections. When a user clicks on the payment link, it prompted to direct to a new page where it will ask to insert payment details. Once the payment is processed successfully, the user will be redirected back to the final checkout page for your e-commerce store. The most distinguished Hosted payment gateway used worldwide is PayPal.

An additional method for Hosted payment gateway is the use of an inline frame (iframe) into the e-commerce platform. Once the user is directed towards the payment completion page, the Payment Service Provider (PSP) generates a form inside the iframe which is not directly advocating your e-commerce platform and no payment details is being captured by it. Once the user successfully performs the payment process through the inline frame, the checkout page is completed and the user is navigated to a successful order page. This method removes the process of redirection between two separate services hence improving the User Experience (UX).

Similarly, for refunds and cancellation of payments, the same redirection is required for users to proceed to the PSP platform to enter their banking details. For recurring payments, the PSP would require the user to create an account and store details of your net balance, so if payment needs to be returned back to the source, it can easily deduce from the account provided by the user.

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– Security

The service offers fraud protection to the user and also comes under the compliance of Payment Card Industry (PCI) standards.

– Easy to use

Your PSP handles all the details for your payment to process, execute and delivered so that you can just focus on making your e-commerce experience better.

– Customizable

The PSP page can include your company logo and details for your current order, thus has the ability to make it customizable


– User Experience

As the PSP takes you a round trip from a different service, the user experience gets affected and user frustration may add up.

Self-Hosting payment Gateways

These type of payment gateways in integrated on the merchant’s site without any requirement for redirection. The details acquired by the buyer are handled solely inside the E-commerce platform. Once the data is submitted, a unique URL is attached with the form input values that work in the background inside our application. These type of gateway require a unique key to identify merchant account and other secure bank details, usually, the key is named as secret key or hash key. Stripe powered payment methods are used to cater to self-hosting mechanisms.

The refunds, cancellation and recurring payments are not processed within the vicinity of e-commerce platform, but instead, the user needs to provide details inside the payment gateway’s official website.

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– Defined User Control

The user will be in full control of the website and feature that it provides. The seamless process without any redirection contributes to a well-defined user experience.

– Clear-cut Flow

The user has complete Control over the website process from start to finish.


– No customer support

Self-hosted payment gateway doesn’t usually offer a dedicated team ready to provide your assistance if your payment process is failed or has issues. You have to rely on your own capabilities or hire an independent support expert that can only add up the cost.

– Less Secure

It is the responsibility of a merchant to take adequate actions for safeguarding customer payment details as no 3rd party security is involved.

API Hosted Payment Gateways

For businesses that do want to disturb their User Experience and want to have full control over their website, the API hosted Payment Gateway is the right choice. Using this technology, your checkout page will incorporate credit or debit card information from the user and will be processed via API through an HTTPS protocol in real time. Recurring payment is also supported through this payment option.

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– Full Customization

The website is in full control and provides an uninterrupted user Experience and UI for their checkout process.

– Integration capabilities

The use of API is versatile and provides adequate support for other devices such as mobile and tablets.

– Flexibility

Using API, there are many options available at your disposal that can add an extra layer of security and flexibility into your payment experience.

Local bank Integration

This option works similarly like the Hosted Payment Gateway. The only difference between the two is that local bank integration is not a payment gateway, but a bank provided the feature. Using Local Bank Integration, the user is required to redirect to the bank’s website, in which the user will be prompted to provide banking details while remaining in the bank page. After the details have been entered and processed, the user will be redirected back to the merchant’s website to continue the checkout process.


– Plain and unsophisticated method

The user will prompt to enter details while remaining on the bank’s website, a good option for one time payments for small business.


– No refunds and recurrence

This payment method doesn’t offer payment refunds or recurring payments, thus not suitable for wholesalers and online shops.

Direct Payment Gateway

Some website provides services to users which require thorough payment confirmations between the payment gateways and merchant site. The instant notification doesn’t work in this process, instead, a scheduled based status checking mechanism is used to and fro between the payment gateway and e-commerce website. In this case, the user will have to wait for final payment completion after an interval of time but adds an additional layer of security into its process. Direct Payment Gateway works in the same way for refunds and recurring payments through continuous scheduling of payment status

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– No PSP

This gateway doesn’t require redirection mechanism between the merchant’s website and payment gateway


– No instant confirmation

They payment success notification take some time as the process between the website and payment gateway is composed of status checks

– More technical know how

This method requires expert involvement as there is a lot of checking involved in this process.

Platform-based payment Gateway Solutions

This payment option is made by providing a separate platform for purchasing goods or service. Usually, the merchant creates a product portfolio and once the client is directed to go to the checkout page, it is redirected to the source website and make the transaction there. This process enables the customer to make a purchased based on their preferred language and currency.


– Increases buyer conversion

The platform-based payment gateway helps the customer to make a conversion in a more prominent manner as the preference of their accustom language and currency is according to their desire

– Guaranteed exchanged rates

Due to the preferred currency of purchase, the users will be at ease when shopping from an international online vendor.


– Not Customization

The platform doesn’t provide customization as payment gateway is separated from the merchant application.

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Benefits of using multiple payment gateways

Statistics show that global e-commerce has reached $1.9 trillion marks in 2016 and it will double the value as time goes by, and ultimately reach to a whopping $4 trillion by 2020. Since users are pretty much accepted this mode of online shopping, so it’s evident that new technologies will gradually emerge into the market to make the online shopping experience better and more rewarding. For the same reason, payment gateways do have commonality among each other in term of its existence, which is to process the payment online and secure manner, but it has been observed that multiple payment gateways have improved the sales conversion for an e-commerce platform to a greater extent.

Here will discuss some of the most obvious reasons to have multiple payment gateways option into our e-commerce application and how does it benefits the user and well as the merchant.


The first most important reason to have multiple payment options to your e-commerce platform is when your business tends to grow progressively until it becomes an internationally renowned brand. This opportunity will also have a certain issue pertaining within in the form of foreign banks, international currencies, and local languages. Combining all these factors and fixing one at a time, it better to provide various payment gateway options for your customers to choose the one most feasible for a specified region. To have some insight, an e-commerce application need a payment gateway to support Argentinian peso as your primary payment gateway doesn’t support that one for time being.

Better economics

Still, if your e-commerce is not looking for international expansion, have more than one payment options is still beneficial for your platform, one of the reasons behind is a good economics factor. It is possible that one payment gateway that you are using has everything you need, but another one provides half of it with better exchange rates. The most important element for any business is to keep exploring different options and if your payment gateway provides that to you, using it along with others is a good way to do business.

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Added thought for shortlisting payment gateways

Many e-commerce platforms showcase their exclusive payment options which have a dedicated support and good acceptance rate, believe it or not, you will come across a number of cases where you will be overwhelmed with the positive case studies and performance history for the highlighted payment gateway. The additional thing to consider when going for the great hunt is that no matter how robust and powerful your e-commerce platform is, it can never cover every payment option in the world.

There are about 100+ payment options in the market with its own set of pros and cons, so based on your business strategy and focus, make sure you put some effort on finding the most befitting payment options you can get your eyes on. And it won’t be an easy treat without a doubt.

Below are some added considerations a business must opt for when searching for their preferred payment option on the market.

Backup and fail-safe capabilities

This is the most important feature for have more than one payment gateway for your e-commerce application. It is possible that to have a backup facility to store your customer’s credit card information, not only in single payment gateway but also in secondary payment gateway by migrating information into it. This method acts as a fail-safe mechanism for times when your primary payment option is disabled or under scheduled maintenance shutdown duration. The main purpose for having more than one payment methods is to make your user experience seamless and without unwanted obstacles.

One other benefits of having multiple payment options are to have a load divider in high demanded seasons when the e-commerce usage is increased. For any reason, if greater among of user traffic makes your payment option slows down its processing capabilities, the other option is ready to share the load and thus making the payment flow uninterrupted.

Having payment gateway and merchant account combined

Many small or upcoming e-commerce application uses payment providers which have the combination of merchant and payment account in a single platform such as PayPal and Stripe. But once your e-commerce platform improves its turn-around potential, you may have to find a more directed payment option that offers stellar transaction rates to the seller and suited as per your organizational needs. For this possibility, the payment option which offers best of both worlds should opt for as well as the one which offers joined feature of payment gateway and merchant account as a whole.

Customer Preference

Many online store businesses are selecting the most popular payment gateway for their platform since it has a huge audience outreach and acceptance rate, its best for every platform, which is a bad assumption. Discussing this scenario, lets considered the most popular internet payment option known as PayPal. It is understood that every e-commerce website or application will integrate PayPal as their number one payment option for making a purchase due to its easy to integrate, well documented for developers and customer authority and security impressions made countless times but the community has given PayPal a prominent role among its competitors, but their model is based on Hosted payment gateway which redirects user to their website for credit card detail requirement, disrupting the flow of User experience.

Point the dilemma having another payment option with Self Hosted payment mechanism could provide a variety for the users to choose from and make their preference accordingly. This method will improve the final sales conversion and assist your business to increase the user accepted rate.

SleekDigital is a Mobile App Development Agency in Singapore that helps businesses transform digitally. We also offer digital transformation consultation and general digital consultation for companies who are looking for suggestions of different systems to be integrated. This is more of companies who lack a digital consultant to propose technologies. Arrange a digital consultation with us today!