What are the Different Types of Payment Gateway?

Not all businesses need the same kind of payment gateway, and that’s exactly the point. Whether you’re a small online store using Razorpay or a large retailer working with Pine Labs, the type of payment gateway you choose can shape how smoothly and securely your transactions run.

At its core, a payment gateway is the behind-the-scenes technology that moves money from a buyer to a seller in an online setting. But not all gateways are built alike. Some are quick to set up with limited control, while others offer deep customisation but require more complex types of payment gateway integration.

In this blog, we’ll walk through the different types available, explain how they work, and help you decide which setup best supports your business goals. Along the way, we’ll also touch on the types of payment processors and how they fit into the bigger picture.

Hosted payment gateway

With a hosted payment gateway, your customer leaves your site to finish the payment on a secure page run by someone like PayPal, Razorpay, or Cashfree. After that, they’re sent back to you.

It’s a handy setup for small businesses or anyone without a tech team to build something custom. Since the provider handles the heavy lifting, especially around security, it’s a simpler way to accept payments without deep integration or compliance headaches.

Pros

• No complex coding or in-house development needed. You can start accepting payments quickly.
• Since the transaction happens on the provider’s side, you’re not directly handling sensitive payment data.
• Providers use advanced security tools, so your customers’ data stays protected.

Cons

• The checkout page is out of your hands, so you can’t fully match it to your brand.
• Redirecting users mid-purchase can sometimes disrupt the flow and lead to cart abandonment.

API-hosted payment gateway

An API-hosted payment gateway lets you build the entire payment experience directly into your website or app. The customer isn’t sent anywhere else—they pay right on your site. With options like Pine Labs Online, you can set things up so the checkout page fits in with the rest of your site.

This works well if you’ve got developers on board and want full control over how payments happen.

Pros:

• You decide how the payment page looks and behaves, which helps maintain consistency and trust.
• From real-time tracking to subscription payments and multi-currency options, you can build the experience your business needs.

Cons:

• You’ll need a development team to set things up and maintain it.
• Since you’re handling sensitive payment data, there are more security and compliance responsibilities.

Self-hosted payment gateway

With a self-hosted payment gateway, your website collects all the customer’s payment details and then securely sends that information to the payment processor. There’s no third-party page involved—everything happens on your platform. This setup gives you complete control over the checkout flow, design, and how data is handled.

Because of this level of control, self-hosted gateways are mostly used by large businesses with the resources to manage security and development in-house.

Pros:

• You get to design the payment experience exactly the way you want, matching your brand from start to finish.
• It’s ideal for large businesses with complex needs and the technical teams to support them.

Cons:

• Handling payment data directly means you’re responsible for keeping it safe.
• You’ll need to meet strict PCI DSS requirements and invest in ongoing security updates.

Local bank integration gateway

A local bank integration gateway connects your online store directly to a domestic bank’s payment system. When a customer checks out, they’re taken to their bank’s secure page to complete the transaction, then redirected back to your website once the payment goes through.

This type of setup is often used by businesses that operate regionally and want to keep things simple, especially when serving customers who prefer paying through familiar banking channels.

Pros:

• Customers often feel more confident using their own bank’s interface.
• Payouts and reconciliations tend to be quicker since everything flows through the local banking system.

Cons:

• Most local bank gateways don’t handle cross-border transactions or foreign currencies well.
• Compared to global gateways, you may miss out on extras like recurring billing or advanced analytics.

Differences between the four payment gateways

Choosing the right payment gateway is crucial for your business’s success. Below is a comparison cheat sheet to help you understand the key differences:

Considerations for choosing the right payment gateway

When selecting a payment gateway, it’s important to weigh both your current setup and your long-term goals. Here are key factors to consider:

• Business Model and Size: Startups and small businesses often go for simpler, ready-to-use gateways. Larger companies may need solutions that offer more control, different types of payment gateway integration, and scalability.
• Target Audience: If you’re serving a domestic market, a gateway with local bank integration might be enough. For global reach, look for one that supports multiple currencies and regional payment methods.
• Developer Support and Integration Effort: Some gateways are plug-and-play, while others need custom development. Make sure the effort aligns with your in-house technical capabilities.
• Security, Compliance and Fraud Prevention: Choose a provider that’s PCI DSS-compliant and offers built-in tools for detecting and preventing fraud.
• Costs and Transaction Fees: Check for any setup, monthly, or per-transaction charges. Some gateways offer lower upfront costs but higher fees per transaction.
• User Experience and Branding: A smooth, user-friendly payment experience that matches your website design can improve trust and reduce drop-offs.
• Cross-Border Capabilities: If you plan to sell internationally, look for support for global cards, currencies, and localised checkout experiences.
• Time to Go Live: Hosted gateways often launch faster. API or self-hosted models might take longer but offer more control.

Conclusion

Choosing between different types of payment gateway options isn’t a decision you can make with a blanket rule. What suits a small, fast-growing business might not work for an established enterprise, and each type—hosted, API-driven, self-managed, or linked to a local bank—offers something different.

The best approach is to match your gateway choice with how your business runs and what your customers expect. How you handle payments says a lot about how your business runs. If it’s clunky or confusing, people notice. But when it works smoothly, it feels effortless—for both you and your customers.

Before you decide, take a real look at what you’ve got in place and where your business is heading. Rushing into the wrong system now can mean double the work later.

Pine Labs Online offers customisable gateway options built for businesses of all sizes.

Contact us today to explore what fits your needs.