What are the Different Types of Payment Gateways?

Introduction

E-commerce businesses whether small or large require seamless payment options across the globe. In this digital world, payment gateways are providing a smooth technology to the merchants for efficient payment transfers. Understanding how they work and their integration with your business is significant. Let us have a look at it.

What is a payment gateway?

A payment gateway is a technological platform and a medium which facilitates transfer of funds and transactions between the customers and the merchants. It is an essential aspect when performing payments online through cards, mobile wallets or other methods. They provide a secure and an efficient way by providing a bridge between the two parties.

Types of payment gateways

Hosted payment gateways

Hosted payment gateways are the type of platform which redirect the user to its secure webpage to further complete the transaction.
The user enters details on the gateway’s webpage and then gets back to the merchant’s website once the payment is done.
It is easy to integrate and highly secure as the gateway ensures all the required compliance. It is considered best for small businesses and enterprises.

Self - Hosted gateways

Self hosted payment gateways have users enter all the details on the merchant’s website itself.
The information is shared with the gateway only for processing. The merchant’s website collects data and then sends it for approval.
It gives more control to the merchant for custom branding and overall experience. It also enables faster payments avoiding the need to redirect.

API - based payment gateways

These platforms process payments through APIs (Application Programming Interface) and the merchant website communicates directly through the API with the gateway.
This provides the merchant with full control over the payment process. The API is responsible for sending the payment request to the gateway.
The gateway processes it and returns the data. This makes the checkout process customizable and it can support multiple payment options as well.

Check out Transfi’s Payout solution for easy integration of API in your platform. It provides multiple payment options with robust secure measures.

Local Bank Integration

This gateway connects the user to the bank directly enabling transactions through netbanking or any other local method.
The bank is responsible to process the payment as they are redirected there.
It has a lower transaction fee however, it requires integration with multiple banks which makes it challenging.

Digital currency gateways

These platforms allow and enable smooth transfer of payments in the form of digital currencies.
The blockchain system is responsible to process the payments and the gateway confirms it to the merchant.
It enables global transfers with low transaction fees.

How do payment gateways work?

Initiation of the payment

The customer initiates payment requests by choosing any method and entering their details.

Transmission

The data and information is encrypted by the gateway and then sent further for processing. This saves the information from frauds.

Forwarding the request to the payment processor

The gateway then sends the details further to the payment processor or the relevant bank. The details are then verified by the processor.

Authorization

The issuing bank or the relevant network verifies and either approves or declines the transaction.

Settlement

The response is then sent back to the gateway through the processor. If the transaction is approved, the merchant processes the order and the funds are transferred to the merchant bank. The settlement period is generally 1-3 days after which the merchant receives payment in their bank account.

Transfi’s collection solution lets you accept payments across borders within a few minutes. It provides a seamless and secure way for your payment needs.

Secure payment gateway options for high-risk businesses

Transfi

Transfi payment gateway enables seamless transfer of funds across the globe providing a reach to 70+countries, 40+ currencies, 250+ payment methods. Integration is made easy with its API guaranteeing a smooth setup. It offers smooth, secure solutions with just a minimal fee. It is secure with robust protocols ensuring protection from frauds. Customer satisfaction also becomes significant with its user friendly dashboard.

Stripe

It is a trusted gateway across the globe for e-commerce businesses. It offers easy integration. It is suited best for small businesses.

PayPal

PayPal is a widely used and popular gateway with easy integration. It is easy to use and supports various payment methods.

How to Select the Best Payment Gateway for Global Transactions

Global Reach

Ensure that the chosen gateway provides you access with multiple countries giving you a wider customer base and a good pathway to expand your business. Good gateways also provide multiple currency options and an efficient currency conversion rate.

Transaction Fees

Payments across the globe also require higher processing fees. Choose a gateway which provides an affordable transaction as well as a cross border fee to maximise profits. Make sure to also beware of hidden costs and fees.

Check out Transfi’s Payout solution offering seamless experience with an affordable and minimal fee.

Security

Ensure that the gateway is equipped with robust security measures and is compliant with the regulations. Secure gateways have features like PCI DSS compliance, 3D secure and AI based fraud detection.

Easy integration

The platform should easily integrate with your existing setup providing a hassle free experience.

^{“Fragmented systems cost time and money. With TransFi BizPay, we offer a single, unified infrastructure that supports both inbound and outbound flows—so businesses can simplify operations, reduce friction, and scale faster.”}^{- Rahul Sahni, COO & CPO TransFi}

Conclusion

The journey of a digital payment, beginning with a customer's selection of a payment method and data entry, is a carefully orchestrated sequence designed for security and efficiency. The payment gateway plays a crucial role, acting as a secure conduit by encrypting sensitive information before transmission. This encryption is paramount in safeguarding against fraudulent activities. The encrypted data is then relayed to the payment processor or relevant bank, where a rigorous verification process ensues. The issuing bank or network evaluates the transaction, and upon authorization—or conversely, denial—a response is generated. This response is routed back through the processor to the gateway. Finally, if approved, the merchant proceeds with order fulfillment. The funds, after a typical settlement period of 1-3 business days, are then transferred into the merchant's bank account, completing the transaction cycle. This multi-layered process ensures a balance between speed, security, and reliability in digital transactions.

Frequently Asked Questions (FAQs)

What is a payment gateway?

A payment gateway is a technological platform and a medium which facilitates transfer of funds and transactions between the customers and the merchants.

They provide a secure and an efficient way by providing a bridge between the two parties.

What are the types of payment gateways?

Hosted payment gateways
Self - Hosted gateways
API - based payment gateways
Local Bank Integration
Digital currency gateways

How do payment gateways work?

Initiation of the payment
Transmission
Forwarding the request to the payment processor
Authorization
Settlement

What are some secure payment gateways?

Transfi
Stripe
PayPal

What are some things to keep in mind when choosing a payment gateway?

Global Reach
Transaction Fees
Security
Easy integration

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Collaborating with TransFi for cross-border payment collections guarantees an efficient and seamless process for companies across the world. With borderless payment collection, companies can receive payments anywhere in the world without having to go through different banking networks or paying high conversion charges. TransFi Collections allows companies to collect money from foreign customers through local payment channels, thus providing greater reach and conversion rates. Real-time settlements remove the delays of traditional banking and allow payments to be made in stablecoins or fiat instantly, providing continuous cash flow. Automated invoice processing streamlines payment processes, saving manual labor and boosting efficiency by creating invoices, adding required documents, and sending timely reminders. Scalable API integration enables businesses to seamlessly integrate TransFi Collections into their current platforms, making global payment collection scalable and efficient. Advanced security and compliance provide the assurance that all transactions are encrypted, secure, and regulated to the highest standards. TransFi Collections is not merely a payment gateway but a full suite of solutions empowering businesses with scalable, compliant, and efficient payment collection services. Whether you collect payments from suppliers, freelancers, or international customers, our platform provides timely, cost-saving, and secure transactions. Step into a digital future of payments with TransFi and feel the force of borderless, seamless collections.

Empower Your Business with TransFi Payment Collections

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Integrate TransFi Collections with your business and experience secure, seamless, and scalable payments that are not only efficient and reliable but also globally compliant.