The success of your business can depend on the payment tools you select. Choosing a payment gateway is one of the most critical steps to accepting online payments efficiently and smoothly. While it’s true that payment gateways are a necessity, deciding which one best suits your business can be tricky due to the sheer size of the industry. As of 2023, the global payment gateway market was valued at USD 29.7 billion. Between now and 2032, that value is expected to grow by 19.5% annually.
With payment gateway providers in no short supply, how can you sift through the sea of options and come out on top with the right payment gateway? It all starts with finding a solution that can meet your specific payment needs.
What is a payment gateway?
Payment processing requires multiple parties to operate in sync with each other, including customers, merchants, banks and payment service providers. A business operating solely through a physical location uses a point of sale terminal to connect its system to payment processors and financial institutions.
For any business operating and transacting online, however, a payment gateway is needed if you plan on accepting credit and debit cards through your digital storefront.
How payment gateways work
A payment gateway acts as a digital bridge to accept payments between your business, customers, and banks. Without payment gateways, online payments and ecommerce businesses would not be possible.
Payment gateways work by encrypting and/or tokenizing financial data before sending it back to an acquirer for payment processing. Once the transaction is approved, the customer’s and merchant’s banks communicate and work together to transfer the funds from one account to the other.
Payment gateways vs. payment processors
Payment gateways securely transmit payment data from a merchant’s checkout to a processor. The processor handles the transaction from this point on, facilitating communication between banks. How to choose a payment processor depends on several factors, such as your specific payment requirements and payment volume. If you’re wondering what is the best payment processor for your business, you should think of it not in terms of the “best” but, instead, the “best-suited.” When it comes to how to choose the right payment processor for your business, you must take the time to compare providers.
Types of payment gateways
Deciding how to choose the right payment gateway requires you to have a thorough understanding of the different types of payment gateways you can use:
| Features | Hosted payment gateway | Self-hosted payment gateway | API-hosted payment gateway | Combined payment gateway |
| Definition | A hosted payment gateway redirects customers to the provider’s page for payment. | Hosted by the merchants themselves, self-hosted gateways can come either out-of-the-box or be built in-house. | API-hosted payment gateways are integrated into a merchant’s system via an API, allowing for the elimination of redirects. | Combined payment gateways offer both gateway and payment processing services, bundling them for customer convenience. |
| Speed | Fast, but requires a redirect. | Dependent on the quality and scalability of the gateway. | Fast and seamless, no redirects. | Bundles payment processing for a faster all-around payment experience. |
| Implementation | Easy to implement, often offers plug-and-play capabilities. | Requires professional setup and sufficient cybersecurity tools. | Requires knowledge of API integrations. | Streamlined with minimal setup, often through an API. |
| Cost | Low upfront costs, but can increase with payment volumes or amounts. | High upfront investment and integration costs, but more custom scalability and infrastructure. | Low upfront costs, often involves an ongoing contract or other recurring payment scenario. | Costs can be higher than payment gateway solutions alone, but the bundled services are often competitively priced. |
Payment gateway selection factors to consider
At this point, you’re probably wondering, what are the main factors to consider when choosing a payment gateway? First and foremost, some of the most important factors to consider are your specific business needs, such as your average payment volume or regional requirements. Aside from these factors, there are several others to address when choosing a payment gateway. Below, we’ve detailed these considerations and how payabl.gateway can help:
Security & compliance
Secure payment processing is a key part of fraud detection and preventing fraudulent transactions. Paying attention to your payment gateway’s advanced security measures is a must. At minimum, your chosen provider should have a proven track record of successfully encrypting and transmitting payment information for customers in your specific geographic area.
The payabl. way: payabl.gateway gives you access to a direct API to build your payments setup exactly as you need it. With secure integrations and real-time data visibility, payabl.gateway keeps your transactions equally safe and efficient.
Support for global payment methods & multiple currencies
Your payment gateway often determines what payment methods you can offer to customers. Consumers today expect multiple payment options beyond credit cards alone, putting you at risk of losing sales and revenue if you do not offer your customers their preferred payments. Likewise, customers, want the ability to pay in their domestic currencies, meaning the right gateway solution needs to offer support for multiple types of currencies.
The payabl. way: payabl.gateway provides the support you need for the payment methods your customers prefer. Along with traditional card payments, payabl.gateway enables digital wallets, bank transfers, crypto payments, and regional methods.
Technical integration & compatibility
Unless you have a large in-house development team, it’s best to err on the side of simplicity when it comes to your choice of a payment gateway. However, you also want a solution that can meet your needs. The key is to find a balance between advanced payment capabilities, regional specificity, and ease of integration.
The payabl. way: payabl.gateway makes it as easy as possible for you to set up your ideal payment gateway, from the payment methods you enable to the ecommerce plugins you integrate. Plus, payabl.’s dedicated support team is there to assist you every step of the way.
Transaction fees, processing speed & payout terms
Your payment gateway of choice can have a major impact on the cost and speed of your payments. The gateway you choose should give you the flexibility to minimise costs wherever possible without sacrificing efficiency. It’s equally essential to assess your payout terms as well to ensure you have maximum visibility over your money movements and easy access to your funds.
The payabl. way: Along with our payabl.gateway solution, payabl. also provides payout services for fast fund disbursement. With this solution, you gain a simpler means for settling payments with vendors, suppliers, customers waiting for winnings, and more.
How to choose a payment gateway for your business model
How to choose a payment gateway for your website or business comes down to the types of payments and payment use cases you’re dealing with. If you regularly manage recurring billing cycles, look for a payment gateway that can offer you the security necessary to charge customers on an ongoing basis.
When you’re ready to choose the best payment gateway for your business, you’ll need to take a moment to assess how the gateway you select may interact with your other payment solutions. You want a gateway that is compatible with your ecommerce plugins and payment methods of choice.
Final thoughts & next steps
payabl. checkout provides everything your business could need out of a payment gateway, from a simple integration process to a wide array of payment methods. We prioritise security and customer experience to give you the solution you need for fast and painless payments.
Want to learn more about how payabl. makes money flow? Contact our team now.
FAQs
What are the four types of payment gateways?
The four main types of payment gateways are:
- Hosted gateways – Customers are redirected to the provider’s page to complete payment.
- Self-hosted gateways – Managed directly by the merchant, either through an out-of-the-box setup or custom-built in-house.
- API-hosted gateways – Integrated via an API, allowing payments to be processed seamlessly without redirects.
- Combined gateways – Bundle both payment gateway and payment processing services into one streamlined solution.
Can I create my own payment gateway?
Yes, it is possible to build your own payment gateway, but it requires significant investment in technology, infrastructure, and security compliance. For example, self-hosted gateways can be created in-house, but they demand professional setup, robust cybersecurity, and ongoing maintenance. Unless you have the resources of a large development team, most businesses find it more cost-effective and secure to use a trusted provider.
Which payment method is best for a website?
The best payment method depends on your customers and your business model. Today’s shoppers expect more than just credit or debit cards—they want digital wallets, local payment methods, and even options like bank transfers or crypto. To maximize conversions, your website should offer multiple payment methods, ideally tailored to the regions you serve.
What is a payment gateway?
A payment gateway is the digital bridge that securely transmits payment information between your customers, your website, and banks. It encrypts or tokenizes financial data, communicates with the acquirer, and enables funds to move from the customer’s account to the merchant’s. Without a payment gateway, online transactions and ecommerce businesses wouldn’t be possible.