Your online store is picking up speed—but is the growth real, or just surface-level? Research shows that 70% of shoppers visit a website, add items to their cart, and then abandon them without purchasing! While there are many reasons this happens, a flawed payment gateway integration is a significant one.
If your payment gateway integration is not properly done on your website, it can cause errors during checkout. These errors force customers to drop off—and that’s just one of the cons.
So, let’s explore the ABCs ofpayment gateway integration—from APIs and webhooks to error handling and beyond.
What is payment gateway integration?
Payment gateway integrationconnects a business’s website, mobile app, or point-of-sale (POS) system with a payment gateway. It enables businesses to receive payments from customers. Payment gateway integration ensures your online business starts and confirms transactions, settles amounts, and secures payment data efficiently.
Typically, three methods of payment gateway integration exist:
- Hosted checkout: Customers are redirected to the payment gateway’s secure page to complete the transaction. The gateway handles the entire payment process, including encryption and compliance.
- Direct API integration: In this method, the entire checkout happens on your website. You use the payment gateway’s APIs to collect, encrypt, and send payment data securely to the processor. There’s no need to redirect the user.
- Hybrid integration:This combines parts of hosted and API-based methods. The checkout form appears on your site, but sensitive data is sent to the payment gateway through tokens or SDKs.
Out of these three methods, developers usually prefer direct API integration. Here’s why:
- Gives full control over UI/UX to create branded checkouts without redirects
- Supports dynamic pricing, coupons, and partial payments
- Enables tokenisation for one-click payments and subscriptions
- Easily connects with CRMs, ERPs, and internal systems
- Handles multiple payment methods and currencies
| Aspect | Hosted Checkout | Custom API Integration |
| User experience | Redirects users to the payment gateway’s page | Checkout happens directly on your website |
| Customization scope | Limited | Extensive |
| Checkout speed | Slow | Fast |
| Error control | Limited | Full |
| Maintenance | Low | High |
Step-by-step API setup for a typical payment gateway integration
Here’s a quick, step-by-step guide for setting up a typical payment gateway integration via API:
Step 1: Create a merchant account & get API credentials
Sign up with a payment gateway (like Pine Labs Payment Gateway) and create a merchant account. Once done, you’ll get your API keys to authenticate requests.
Set up two environments:
- Sandbox for testing fake transactions safely
- Live for handling real payments after integration
Step 2: Configure checkout & initiate transaction
After setting up the environment, design the checkout flow. This includes creating an order object or generating a transaction token using the API.
Depending on the payment gateway’s options, you can use a hosted checkout, a redirect-based flow, or a custom embedded UI.
Make sure to handle customer payment input—like card details or UPI IDs—using PCI DSS-compliant methods. This helps protect sensitive data.
Step 3: Call the payment API endpoint
When the customer submits their payment details, your backend sends a POST request to the payment gateway’s API endpoint. The request includes transaction amount, currency, customer info, payment method, and callback URLs.
The callback URL is where the gateway redirects users after the payment. It also sends webhook notifications with the transaction outcome. This API call starts the transaction.
Step 4: Capture response & handle status
After initiating the payment, your system receives a response from the gateway. It usually shows one of three states: success, failure, or pending. Based on this, guide the user.
For success, redirect to a confirmation page and update the order. If payment fails, show a clear error message and allow retries. If pending, wait for webhook notifications to confirm the status.
Webhooks: Real-time transaction monitoring
Webhooks are automated messages sent from one system to another when a specific event happens. While APIs let your business start payments, webhooks help you track them in real time.
They facilitate asynchronous status updates, too. So, if a users drop off, webhooks allow your system to get the payment status and process it in the background.
Common webhook events in payment gateway integration include:
- payment.success
- payment.failed
- payment.cancelled
- refund.initiated
- settlement.completed
Incorrect webhook setup can trigger wrong actions or cause security risks. To avoid this, follow these best practices:
- Use secure headers and hash verification: Check the webhook’s authenticity with a secret key or signature hash (e.g., HMAC-SHA256). It ensures the request is real and untouched.
- Store and verify response payloads: Log all webhook data for audits. Additionally, always validate the data before using it.
- Make webhook retries idempotent: Design your endpoint so repeated webhook calls don’t duplicate actions. Also, use unique event IDs to avoid processing an event more than once.
Payment gateway integration: Error handling & failover strategies
Payment failures are common in businesses. The average rate is 5% to 10% globally. Common causes include:
- Payment gateway timeout: The transaction takes too long. The gateway fails to respond on time.
- Duplicate request:The user clicks the pay button twice. The system blocks duplicate transactions.
- Token expired: The payment token is used too late. The transaction fails.
That’s why recovery strategies are a must. Error handling steps in here. It means how your system finds, reacts to, and fixes payment errors.
Effective error-handling strategies include:
- Input validation:Check all fields (amount, currency, card number) before sending a request. This reduces rejections.
- Retry logic:Add retry options on client and server sides. It helps with network issues and timeouts.
- Status mapping: Handle HTTP codes smartly. Proceed on 2xx responses. Show clear messages for 4xx errors. Retry 5xx errors.
If these don’t help, smart routing works as a backup. Herein, your system will choose the best gateway based on real-time factors.
Smart routing checks things like gateway downtime, success rates, and payment method support. Then, it routes the transaction to the most suitable gateway. This boosts success and keeps users happy.
| Error type | Recommended developer response |
| Currency mismatch | Validate currency before request Map supported ones |
| Insufficient funds | Show clear message Offer other payment methods |
| Card not supported | Check card type before submission Offer options |
| Payment limit exceeded | Inform user Suggest payment split or other method |
| Session timeout | Use timeout handlers Ask the user to re-authenticate |
Read more: :Top Payment Gateway Trends for 2025: What Website Owners Need to Know
Testing & go-live checklist for developers
Ready with your API and webhook? But wait—don’t go live yet!
Follow this checklist to spot and fix errors before launch:
1. Use sandbox mode to test all edge cases
Run your integration in the sandbox. Simulate all cases—success, failures, card declines, and expired tokens. This ensures your system works in every situation before going live.
2. Validate webhook triggering and retries
Check if your server receives webhook updates and responds with 200 OK. Confirm it handles retries. Verify webhook authenticity with secret signatures to stop fake calls.
3. Test for concurrency, multiple sessions, and failures
Simulate many users checking out at once. Try clicking ‘Pay’ twice or refreshing. Find and fix issues like duplicate orders or mismatched payments.
4. Implement logging and alerting for mismatches
Log every transaction with request ID, status, and time. Set alerts for differences between your system and the gateway.
5. Ensure SSL encryption, key rotation, and tokenization
Use HTTPS. Rotate API keys. Don’t store raw card data. Use tokens for secure and compliant storage.
Developer’s go-live checklist:
| Sandbox testing ☑ Simulate successful transactions ☑ Test failed payments ☑ Try different payment methods ☑ Validate edge cases Webhook validation ☑ Check webhook triggers ☑ Verify retry behaviour ☑ Validate authenticity ☑ Ensure response is returned on time Error handling & recovery ☑ Map status codes (2xx, 4xx, 5xx) ☑ Implement retry logic ☑ Use idempotency keys ☑ Show clear error messages Session & concurrency testing ☑ Simulate multiple checkouts ☑ Test double-clicks during payment ☑ Keep payment state consistent ☑ Prevent duplicate charges | 5. Security measures ☑ Use SSL ☑ Rotate and store API keys safely ☑ Don’t store raw card data ☑ Use tokenization 6. Logging & alerts ☑ Log transactions with timestamps and request IDs ☑ Monitor webhook delivery ☑ Set alerts for stuck payments ☑ Keep logs for audits 7. Final review ☑ Run full sandbox tests ☑ Test with real card ☑ Get stakeholder approval ☑ Deploy with monitoring |
Final thoughts: Build secure, scalable payment gateway integrations with confidence
A seamless payment gateway integration is key to smooth checkouts, customer trust, and business growth. By using the right tools and applying best practices—like structured API setup, webhook validation, and strong error handling—you can build systems that grow with ease.
Want to simplify payment gateway integration? Try Pine Labs Payment Gateway—a solution designed to help you accept payments faster, integrate smarter, and reduce failures.
Ready to offer smooth checkouts? Get in touch with us today!