Nowadays, many businesses have turned instead of using traditional payment methods such as direct bank transfer to using payment gateway because they enable more benefits; instant payment, credibility for merchants, and security.
Types of Payment Gateway
1- Hosted payment gateways
Hosted payment gateways direct your customer away from your site’s checkout page. When the customer clicks the gateway link, they are redirected to the Payment Service Provider (PSP) page. where the customer fills in his or her payment details, and after paying, is redirected back to your website to complete the checkout process. The most well-known example of a hosted payment gateway is PayPal.
For recurring payments, the profile is created for a user with information of recurrence count, frequency, amount etc. The payment gateway will deduct recurring payments with the help of created profile and then sends payment notification to your website.
2- Self-hosted payment gateways
With this type of gateway, payment details are collected from the customer within the merchant’s website. After the details are requested, the collected data is sent to the payment gateway’s URL. Some gateways require the payment data to be provided in a specific format, whereas others require a hash key or secret key.
For online businesses and wholesalers especially, a self-hosted payment gateway offers the most streamlined experience because it allows the customer to complete the transaction from a single page, and offers the merchant control over the customer experience.
3- API hosted payment gateways
With API hosted payment gateways, customers enter their credit or debit card information directly on the merchant’s checkout page and payments are processed using an API (Application Programming Interface) or HTTPS queries. This type of gateways mostly supports recurring as well as fixed payments.
4- Local bank integration
Local bank integration gateways redirect the customer to the payment gateway’s website the bank’s website where they enter their payment details and contact details. After making the payment, the customer is redirected back to the merchant website, with payment notification data sent upon redirection.
These payment gateways are also considered as hosted payment gateways which work in a straightforward manner. These types of payment gateways didn’t support recurring payment, refund, and cancellation. Merchants need to do them manually.
5- Direct Payment Gateway
Some of the payment processors don’t support Instant payment notification. They create a profile and deduct the required amount from the user’s credit card on scheduled basis but does not inform the system (who requested for the amount). They just inform that whether the credit card is approved or not.