Online Payment Gateway Integration: A Complete Guide

Payment Gateway Integration is important for online businesses to survive in the current market.

Fintech is growing across the world in the form of online payments, digital banking, and contactless payments, just to name a few niches.

Without any doubt, people are now hooked on using virtual currency and leaving their wallets in the past. This is surely a good thing for everyone.

Now, if businesses want to stay profitable and cater to changing user demand, they need to adapt.

That’s where payment gateways and payment gateway integrations come in.

Being a top fintech technology, it allows businesses to accept payments digitally in a split second on their online platforms.

Want to achieve this on your platform?

Well, there’s more to integrating a payment gateway than meets the eye.

Let’s decode the sophisticated world of payment gateway integration, custom payment gateway development, challenges, and much more in this guide.

What is Payment Gateway Integration?

Let’s answer the big question first, what is payment gateway integration?

Starting with the basics, the term “payment gateway” refers to a front-end technology that allows businesses to accept payment from customers via digital wallets, debit cards, credit cards, or online banking methods.

Payment gateway applications range from physical stores receiving payments through physical cards to online stores which allow customers to pay via digital solutions.

Now, coming to “Payment Gateway Integration”, it is a process of connecting your website or app to a payment gateway service. This allows customers to enter their payment information securely and process transactions electronically.

While this might seem like a new concept to some, it has been around for a good while, being used in some of the top on-demand apps; plus any other app that handles payment processing.

Fintech Statistics show that digital payment apps have become the dominant fintech product, claiming 25% of the market share.

As a result, payment gateway integration payment gateway integration in mobile app development has become a popular choice and feature.

But how does it work? This is what our next section will tell us:

How Do Payment Gateways Work?

So, how do payment gateways work?

Well, it serves as a mediator in online transactions, facilitating secure payment processing between customers and merchants.

Their primary function includes encrypting sensitive information, such as credit card details, to protect against fraud.

When a customer initiates a payment, the gateway communicates with the payment processor or acquiring bank to authorize the transaction, verifying available funds.

Once authorized, it processes the transaction, transferring funds from the customer’s account to the merchant’s account.

Here’s how the Payment Gateway works:

• The payment processing flow starts with the customer deciding to buy something from the platform. In any case, the user moves to the checkout page and enters their payment information, including card details or alternative payment method credentials.
• As soon as the customer enters their payment details, the integrated payment gateway collects the info via encryption or tokenization.
• Once the information is collected, the payment gateway will put it through a firewall that checks it for fraud. If a green light is given, the payment information is sent to the merchant service provider that handles payment processing for the business.
• It’s important to establish secure communication with the bank and that’s what happens in this step. Here, the acquirer forwards the information to the customer’s issuing bank (the bank that issued their credit or debit card).
• Based on the verification and fraud checks, the issuing bank either approves or declines the transaction.
• Following authorization, the issuing bank’s decision is sent back through the acquirer and the payment gateway.
• If the transaction is approved, the funds are transferred from the customer’s account to the merchant’s account, typically within a few business days.

So, that’s how a seamless integration payment gateway works. Let’s get to know about the essential components of Payment Gateways.

Essential Components of Payment Gateways

Here is a comprehensive table explaining the essential components of payment gateways:

With that out of the way, it’s time to learn about the several types of payment gateway solutions available in the market.

Types of Payment Gateways

Well, without any second thought, there are different types of online payment gateways present in the market.

Let’s get to know them in detail:

1. Hosted Payment Gateway

So, what is a hosted payment gateway?

Well, a hosted payment gateway is a third-party service provider that handles the complete payment process.

What happens in this method is that when a customer makes a payment; they are redirected to the payment service provider’s website to complete the transaction.

Once they complete this, they are returned to the merchant’s site.

How it Works:

• The Merchant Integrates the Hosted Payment Gateway into their website.
• When the customer chooses to pay, they are redirected to the payment gateway’s site.
• Once the payment is done, they redirect the customer back to the merchant’s website with the transaction result.

Pros:

• Secure and compliant with regulations.
• Easier to implement and maintain.
• Less possibility for fraud and data security.

Cons:

• Less control over the customer experience.
• Possible higher fees.

2. Direct Post Payment Gateway

Direct Post Payment Gateway is somewhat similar and somewhat different.

This allows the merchant’s website to send transaction data directly to the payment processor without leaving the site.

The payment gateway processes the transaction in the background.

How It Works:

• The customer enters the payment details on the merchant’s website.
• The transaction is securely sent to the payment gateway for processing.
• The payment gateway communicates with the bank and sends the result back to the merchant’s site, completing the process without redirects.

Pros:

• Seamless Experience for users.
• More control over customization.
• Faster checkout process.

Cons:

• Merchants must ensure security and compliance.
• Higher technical complexity.

3. Self-Hosted White Label Payment Gateway

It is a white-label payment gateway that allows businesses to provide their own branded payment solution using third-party technology.

This type of gateway is hosted and maintained by a third party but branded to match the merchant’s business.

How it Works:

• The merchant uses the gateway’s software and technology but provides a custom-branded experience.
• The merchant’s customers interact with the merchant’s brand during the entire payment process.
• Merchants can tailor the checkout page to reflect their business identity.

Pros:

• Full control over branding and user experience.
• Can be tailored to specific business needs.
• Customizable features.

Cons:

• Requires technical integration.
• Higher setup and fintech app maintenance costs.

4. Self-Hosted Payment Gateway

As the name implies, a self-hosted payment gateway doesn’t require users to leave the site.

This gives the merchant complete control over the entire payment processing system. The merchant develops and hosts the gateway in-house, making it entirely customizable to their choice.

How it works:

• The merchants can build their own payment gateway or use an app solution to design it.
• The merchant then possesses and stores all payment data and handles integrations with financial institutions directly.

Pros:

• Complete control over the payment process.
• Tailored to the business’s exact needs.
• Potential for lower long-term transaction fees.

Cons:

• High development and maintenance costs.
• Significant responsibility for security and compliance.

5. Local Bank Integration Payment Gateway

Do you know what a local bank integration payment gateway is?

Local bank integration payment gateway is a solution where the merchant’s payment gateway integrates directly with the merchant’s local bank for processing payments.

This solution typically works well in specific countries or regions.

How it Works:

• The payment gateway communicates directly with the merchant’s bank for payment authorization and settlement.
• Payment data is securely transferred between the bank and the payment gateway to complete the transaction.

Pros:

• Lower transaction fees for local businesses.
• Simplified for local transactions.
• Easier reconciliation with the local bank.

Cons:

• Limited to certain regions.
• May not support international payments.

6. Mobile Payment Gateway

It’s a pretty common and famous payment gateway.

It allows businesses to accept payments via mobile devices, including smartphones and tablets. This includes mobile apps, mobile websites, or payment apps like PayPal, Google Pay, and others.

How it works:

• The customer uses their mobile device to make a payment via a mobile wallet or a mobile-optimized website.
• The payment gateway processes the transactions, whether it’s NFC (Near Field Communication) for tap payments or via QR code payments.

Pros:

• Convenient for users on the go.
• Faster and more secure than traditional card payments.
• It’s popular with younger, tech-savvy consumers.

Cons:

• Requires mobile-specific infrastructure and support.
• May be vulnerable to mobile security threats.
• Not all customers may be familiar with mobile payment options.

7. Cryptocurrency Payment Gateway

Cryptocurrency has become quite famous in the last few years and is slowly taking over in different industries.

In all of this, Fintech stands at the forefront.

A Cryptocurrency payment gateway allows businesses to accept digital currencies like Bitcoin, Ethereum, and others as payment for Goods and Services.

How it Works:

• The merchant integrates a cryptocurrency payment gateway into their website or app.
• Customers select cryptocurrency as their payment method and send the payment directly to the merchant’s wallet.

Pros:

• Low or no fees for transactions.
• Attractive to customers who use digital currencies.
• It can be international and borderless.

Cons:

• Cryptocurrencies are volatile and unpredictable.
• Limited acceptance among the general public.

Now that we are done with several types of payment gateway integration, you might be wondering how to integrate your online payment gateway. The process is different for apps and websites.

Steps to Integrate Your Online Payment Gateway in the App

Curious to know “How to Integrate Payment Gateway?”

Well, let’s see how you can integrate your online payment gateway. However, they both differ in the mobile app.

Let’s get to know app one first:

Step 1: Choose a Payment Gateway

First things first, pick a payment gateway.

To do so, make sure you choose the right one, and do thorough research on different service providers. Consider different aspects that include pricing, transaction fees, security measures, and support offered by them.

Once you are done with this, it is time to:

Step 2: Set Up a Merchant Account

Now that you’ve chosen the right payment gateway, it’s time to contact your gateway provider and establish a merchant account.

This includes undergoing verification checks, providing verification checks, and agreeing to the terms and conditions.

Step 3: Obtain API credentials

Once your account is set up, the gateway provider will offer you the API credentials (Keys, tokens, etc.) Required to incorporate their API into your app.

And, after this, it’s time to…..

Step 4: Integrate the Payment Gateway SDK

Most payment gateways offer app development kits (SDKs) that streamline the payment gateway API integration process.

These SDKs offer different libraries and tools specifically designed for your chosen platforms which are:

• Android
• iOS
• Hybrid

Then, as per the gateway’s documentation and instructions, you need to incorporate the SDK in your app’s codebase.

Step 5: Execute Payment Flow

Work on the development and logic within your app to handle the payment flow. Here’s what is included in this:

• Collect user payment information.
• Encrypt sensitive data before transmission.
• Use the API to send payment requests to the payment gateway.
• Handling authorization responses (success or failure) and communicating them to the user.
• Once the transaction is successful and displays the confirmation message.

Now, it’s finally time for payment gateway integration testing.

Step 6: Testing & Launching

As the Golden Rule says, it’s time to thoroughly test the payment integration in a sandbox environment to ensure everything is working.

Usually, financial app testing is done to check for and fix errors before the checkout process is unified.

Once the final version is ready, it’s time to go live!

As soon as you are live, you need to monitor the payments properly to further ensure it is properly functional and transactions are completed properly.

Now, let’s learn how to do it on a website.

How to Integrate Payment Gateways with Website?

Now, “How to Integrate Payment Gateways with Website?”

The payment gateway integration includes different steps and requires specific processes that can vary depending on the chosen gateway and the platform the website is built on:

Step 1: Select a Payment Gateway

Now, the first thing to do is to pick the right payment gateway according to your business requirements.

To do it rightfully, knowing how to make a website with a payment gateway includes factors such as transaction fees, security processes, and more.

Working on such factors will help you to make a decision that aligns with your business and is in your best interest.

Step 2: Create a Merchant Account

One of the core payment gateway integration requirements is access to the tools, for that you need to build a merchant account.

To do so, you must include providing business information, undergoing verification checks, and admiring the terms and conditions.

Step 3: Obtain API Credentials

After the merchant account is set up, the gateway provider will offer you the API credentials (Keys, tokens, etc.), required to integrate the payment gateway integration API into your website.

Step 4: Choose the Integration Method

Choose the right integration method in the next step-by-step payment gateway integration process.

Make sure the method is suitable as per your needs, for which you should consider factors like security, customization, and technical expertise.

Step 5: Testing and Deployment

Once this is done, it’s time to find and test the integration of each gateway and the overall payment flow in the sandbox environment.

As soon as the final version is ready, we can deploy the updated website with the integrated payment gateways.

Top Global Payment Gateway Providers

With different payment gateways available in the market, it is hard to choose the right payment gateway provider.

However, there are a few options available in the market; let’s look at some of the best payment gateways.

These are, as mentioned below:

► PayPal

The market is filled with apps like PayPal; this OG is also nominated as the best in the payment gateway world.

In the world of Fintech, PayPal is a widely recognized brand that offers a variety of payment methods, including credit cards, debit cards, and local payment options in specific regions.

It is surely inspiring investors to develop an app like PayPal and launch it.

Charges:

The charges are around 2.9% +$0.30 per sale, but this can vary depending on the country and transaction type. Additional fees for currency conversion, chargebacks, and many other services may apply.

► Stripe

Let’s start with the most popular payment gateway in the market, “Stripe”.

Various payment methods including debit cards, credit cards, ACH payments, and other different payment options.

Due to its easy-to-use interface and a variety of features, the gateway is popular among startups and businesses alike.

Charges:

Transaction fees: 2.9% + $0.30 per successful card charge. There are additional charges for other services like conversion.

► Square

If you are not living under a rock, you must have heard of “Square”.

Well, apart from its popular payment app – cash, it also provides a Payment Gateway for brick-and-mortar businesses and others.

With Square, businesses can accept online and offline payments, providing suitable payment methods to users.

Speaking of methods, Square itself provides point-of-sale hardware and online checkout solutions.

Charges:

The transaction fees for the Square payment gateway are 2.6% + $0.10 per swipe for in-person transactions and 2.9% + $0.30 per online transaction. Plus, there’s an additional fee for hardware, specific features, and international transactions that may apply.

► Braintree

One of the famous Payment Gateway Service Providers is “Braintree”.

The platform is owned by PayPal and emphasizes more on mobile payments. Thus, making it a popular option for eWallet app development.

It offers payment methods including credit cards, debit cards, and alternative payment options.

Furthermore, it provides robust APIs and SDKs for seamless integration with mobile apps and websites.

Charges:

Depending on the account type and volume, the transaction fee is typically around 2.9% + $0.30 per transaction. There’s an additional fee for setup, PCI compliance, and other services that may apply.

► Authorize.Net

Lastly, we have “Authorize.Net”, a well-established payment gateway option.

As the name suggests, the app provides all the payment methods that you want from a payment gateway service provider, credit cards, debit cards, and recurring billing options.

This payment gateway option has a strong focus on security and fraud prevention areas.

Charges:

Here, the transaction fee depends on the account type and volume. It’s typically around 2.9% + $0.30 per transaction. Plus, there’s an additional fee for setup, PCI compliance, and other services that may apply.

How to Choose the Appropriate Payment Gateway Options?

So, “How to choose the right payment gateway for your business?”

As a business, there is a lot to reflect on when selecting a gateway processor. In the following section, we’ll understand some criteria that will help you decide the best.

♦ Security Features

Security is one of the most important elements you can’t overlook in payment processing.

Make sure to choose a payment gateway solution for your business that complies with PCI-DSS standards and offers robust security features including encryption, fraud detection, and secure tokenization.

These measures protect sensitive customer data and help prevent transactions from being made.

♦ Ease of Integration

One of the factors to consider for payment gateway integration is how well it can be incorporated with the existing platform or website.

Check for necessary plugins, APIs, and developer support to ensure a smooth and hassle-free setup.

This can save a lot of time and reduce technical complexities.

♦ Cost & Pricing Structure

When selecting a payment gateway solution, consider the cost and pricing structure.

You need to consider hidden fees, transaction fees, and hidden charges. Some gateways offer tiered pricing based on transaction volume, which can be beneficial for growing startups.

All you have to do is ensure the pricing model aligns with your budget and business size.

♦ Customer Experience

Every business’s ultimate goal is to enhance the user experience.

A user-friendly checkout process is important for reducing cart abandonment rates. You should make sure to choose a gateway that supports a simple, intuitive interface and supports mobile payments.

A smooth and efficient payment process can meaningfully enhance customer satisfaction and loyalty.

♦ Global Reach

Another factor to consider while choosing a payment gateway system is its global reach.

If you plan to expand internationally, select a payment gateway that supports different languages & currencies. It is really important to allow users to pay in their currency.

This capability allows you to cater to a global customer base, making it easier to conduct business across borders without complication.

So, these are some of the factors to consider for Payment Gateway Integration.

Rest assured, by taking the help of an experienced company, you can surely implement the best for your business. Our next section just talks about that:

Nimble AppGenie – Your Partner for App Solutions

Are you willing to integrate a payment gateway into your app or website safely?

Well, without a doubt, dealing with all things payment gateway-related can be complex.

So why not leave it to the top fintech app development company around? Nimble AppGenie is a market-leading company offering the best fintech solution.

With a 98% retention rate, we have delivered many successful fintech systems that have disrupted the market.

If you have a payment gateway integration project that you need help with, our payment gateway integration developer can help.

Conclusion

Payment Gateway Integration has become an important element across different niches of apps and web solutions.

This boom is seen due to the growing need for increasing digital payment popularity. Now, if you want to be a part of the future where money is digital, it’s the right time to make your solution digital payment-friendly.

Whether you choose to integrate an existing payment gateway or develop a custom one tailored to your business needs, we are here to help.

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Niketan Sharma

Niketan Sharma is the CTO of Nimble AppGenie, a prominent website and mobile app development company in the USA that is delivering excellence with a commitment to boosting business growth & maximizing customer satisfaction. He is a highly motivated individual who helps SMEs and startups grow in this dynamic market with the latest technology and innovation.