Ecommerce: Types of Payment Gateway

Business nowadays have changed from traditional payment systems (such as direct bank transfer or cash) to online payment gateways because of the efficiency and convenience of instant payment, secure transfer, credibility and other valuable benefits. So, How many types of payment gateway? What are advantages and disadvantages of payment gateway?

Payment gateways connect your business with a payment processor, facilitating a smooth checkout process on your ecommerce website. When you’re setting up a payments system, you’ll have several options. What are the different types of payment gateway in ecommerce, and how can you choose the right option? Here’s what you need to know.

Types of payment gateway in ecommerce

Before you can choose the best fit for your website, you’ll need to think about your business needs and infrastructure. Some types of payment gateway are self-hosted, while others offer a full package service. The main difference between these various types of payment gateway is how they’re integrated into your website. Some require more maintenance and upkeep, while others offer hands-off support from the host.

1. Hosted payment gateways

If you don’t want to deal with the finer details of integrating and maintaining your website’s payment gateway, a fully hosted service is probably your best bet. Hosted payment gateways work by directing the customer away from your checkout page. Instead, when the customer is ready to make a purchase, they click on a ‘buy now’ link which redirects to the host, or payment service provider (PSP) page. This separate site is where the customer fills out payment details before redirecting back to your business website to complete the sale. One example of a popular hosted gateway is PayPal.

These types of payment gateways offer a high level of security with PCI compliance and fraud protection. They’re also very user-friendly and easy to set up, with the host taking care of the details. However, because a hosted gateway is external, you won’t be able to fully control your buyer’s checkout experience.


  • Secure – Transaction is Fully PCI compliant and defended by the fraud protection system
  • Easy – This type of payment gateway is common to most users, simple to use and easy to install
  • Customize


  • The merchant cannot monitor the entire customer’s purchasing experience because of the external payment gateway factors.

2. Self-hosted payment gateways

If you prefer to have greater control over your user experience, you might be more interested in choosing a self-hosted payment gateway like Shopify or Stripe. The difference between hosted and self-hosted gateways is that in the case of self-hosted, customer payment details are collected directly on the merchant website. These details are then encrypted and submitted to the third-party payment gateway for authoriastion.

One benefit is that a self-hosted gateway enables a faster checkout process, because the transaction is completed solely on the merchant site. There’s no redirection to a separate site for payment, which puts the merchant in full control over a user’s payment experience. The disadvantage is that you won’t have access to a full technical support team as you would with a hosted service. That means if something goes wrong, you’ll need to hire an outside professional or figure it out yourself.


  • Great customer service – completing the whole transaction in one location
  • Customisable flow – the merchant can monitor the payment journey


  • No support system – Self-hosted payment gateways do not typically have a technical support team. If anything fails, you’ll need to find out how to fix the problem by yourself. And you can employ an accomplished specialist who may be expensive.

3. API-hosted payment gateways

API hosted payment gateways are best for merchants who want to take complete control of their website design. Both the payment details and processing are handled directly on the merchant website in this case, using an application programming interface or API. API hosted gateways offer a fully customisable checkout experience and can be integrated with a variety of setups including mobile devices.

What’s important to remember if you choose these types of payment gateway is that the merchant is responsible for security. That means you’ll need to pay extra for SSL certification and ensure that the payment process is PCI DSS compliant.


  • Customisable – has complete oversight of the payment journey’s customer experience and UI
  • Integrative capable – can be used for mobile devices, laptops, etc.


  • Security – Compliance with PCI DSS and purchasing SSL certification are the requirement that merchants have to strictly follow

What types of payment gateway will you choose?

Above all, every types of payment gateway has its own advantages and disadvantages. The payment gateway you select will be based on your business model, the types of features you need and how much you want control over the payment experience of your customers.

Megatek Communications and Computers is equipped with the right knowledge in choosing the payment gateway that suits your business

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