What is a Hosted Payment Gateway?

A hosted payment gateway is an external service that processes and transfers funds from customers to your business’ bank account. In other words, instead of handling sensitive data yourself, a third party provides all necessary security measures like encryption and fraud protection while managing compliance with the Payment Card Industry Data Security Standards (PCI DSS) as well. Once a customer makes a purchase, he/she will be directed to a secure, hosted checkout page provided by the service, then back to your website once the purchase has been made.

Use hosted payment gateways when:

You need rapid deployment (usually within hours or at most days): A major advantage of using a hosted payment gateway is how quickly you can get started accepting payments. While there may still be some setup involved (such as configuring the gateway to match your brand and integrating it with your existing application), much of this can usually be accomplished through APIs or simple plugins.

The amount of technical knowledge and resources required is limited: Most hosted payment gateways provide user-friendly interfaces and APIs which allow even novice developers to easily connect their applications to the gateway and start processing payments.

You do not require total white-label control over the checkout process: One drawback to hosted payment gateways is that you cannot fully customize the checkout experience. Customers will always be directed to a hosted checkout page (provided by the service) rather than remaining on your own website. However, many services offer branded checkouts where your company logo, color scheme, etc. can be displayed.

Common use cases include:

• Subscription-based models
• Small businesses
• Ecommerce websites
• SaaS products

Pro Tip: What Is A Payment Gateway?

Hosted Payment Gateway vs Self Hosted Payment Gateways

Payment gateways can be Hosted or Self-hosted gateways (aka non-hosted payment gateways.)

Hosted gateways direct your customers to the payment service provider page on their website. Once the transaction is done securely, the customer is redirected to your website.

The hosted payment solution is customizable, easy to set up, PCI compliant and most users are familiar with this type of gateway. The key drawback is that because the gateway is external, the merchant cannot control the user experience. 

However, the situation is a bit different when it comes to a self-hosted gateway (or non-hosted payment gateway). You capture the transaction details on your website. Afterwards, the payment gateway service provider takes over for payment processing. The two key benefits of self-hosted payment gateways are as follows.

1. A good customer experience as the entire transaction takes place in one place.
2. A customizable flow where the merchant has control over the payment journey. 

Both these payment solutions are safe and allows merchants to customize the transaction process. In fact, the only perceived disadvantage of a hosted gateway is the user experience may not be white-label.

A self-hosted payment gateway (aka non hosted payment gateway), sometimes referred to as a seamless gateway can be a white-labelled payment experience, but tends to require more technical effort to set up. Furthermore, modern payment gateways often provide a self-hosted integration option as well.

Feature	Hosted	Self-Hosted	When to Use
Setup complexity	Simple (hours)	Complex (days/weeks)	Quick launch needed
Control over UI/UX	Limited (provider’s page)	Full (white-label)	Brand consistency matters
PCI compliance	Provider handles it	You must manage	Compliance critical
Technical expertise	Minimal required	High required	Limited tech team

Hosted Payment Gateways Uses

1. Enhanced Analytics for Past Transactions

 A hosted payment solution like Cashfree maintains and sends records of each transaction completed or declined by the system. 

Insights and real-time purchasing data are vital for the growth of a business as it allows the founder to make sound and informed decisions based on the numbers. The information collected in real-time is crucial because it shows the buyers’ behaviour. One of the most important benefits of a well-developed gateway API is the ability to collect actionable data. 

Additionally, the Cashfree dashboard helps reconcile transactions easily. Intelligent algorithms reconcile rejected transactions to help you know which transactions failed and the reason for their failure. 

2. Defines Transaction Limitations 

You can also leverage the payment restriction facility of hosted payment gateways to prevent chargebacks and fraud. In fact, the system can have a maximum or minimum ticket size set up to ensure proper payment authorization.

When to Use Hosted Payment Gateway

You should select a hosted payment gateway when:

You Want Rapid Deployment (Within Days Not Weeks): Because hosted payment gateways typically deploy very quickly (in terms of the actual configuration and implementation), they are ideal for organizations looking to rapidly begin accepting credit cards online.

Your Development Team Has Limited Resources: Many organizations lack sufficient technical talent to effectively develop and maintain a self-hosted solution. In these situations, hosted solutions become particularly valuable because of their ease of implementation and maintenance.

PCI DSS Compliance Is A Concern For Your Business: As mentioned above, one of the biggest advantages of hosted solutions is the fact that they handle PCI DSS compliance for you. This means you won’t have to worry about maintaining the infrastructure or ensuring ongoing compliance with regulatory requirements.

You Need Easy Integration With E-commerce Platforms: Since so many e-commerce platforms already have pre-built connectors for popular hosted payment gateways, choosing a hosted solution often becomes the easier path forward.

You Don’t Require White Label Customization: Some companies require the ability to completely customize their checkout process in order to create a seamless buying experience that matches their branding and identity. These organizations are better suited towards using self-hosted solutions.

You Should Select Self-Hosted Solutions When:

You Need Total Creative Control Over The Checkout Experience: Companies who wish to control every single detail of their users’ checkout experiences are better served by using self-hosted solutions.

Brand Consistency Is Extremely Important: Organizations whose branding identity is paramount to their overall success (and thus would prefer to maintain consistent branding throughout every interaction) benefit from using self-hosted solutions.

You Have An Advanced Development Team: Companies with large amounts of technical talent often find themselves better able to implement and maintain self-hosted solutions.

You Are Willing To Accept Additional Technical Challenges: Using self-hosted solutions increases the burden on your development team and can result in longer times-to-market.

Benefits of Hosted Payment Gateways

Most importantly, a huge advantage of a hosted payment solution is the ease of integration with all major card networks and major banks of India. This helps in offering a significant improvement over routing payments over third parties. 

Ease of Use

 A seamless checkout experience reduces the chances of cart abandonment and boosts sales. A hosted payment solution makes the payment process easy, even for first-time online shoppers. The customers can choose any payment mode. For instance, they can choose net banking, cards, wallets, UPI, Pay Later or EMI. 

Furthermore, enterprises can enable recurring bill for their subscription based business models. It further increases customer satisfaction as they do not have to authorize every single transaction.

Plug-and-Play Plugins For eCommerce Stores

Most hosted payment gateway solutions have ready to use plugins for eCommerce stores. These plugins help businesses accept payments within a day of signing up. 

Cashfree has plugins for Shopify, WooCommerce, Magento, Opencart and Prestashop.  All you have to do is set INR as your preferred currency and head to payment tabs. There, you can select Cashfree as your preferred payment gateway. After that, you can set the active environment as Test/Live. Finally, enter the respective ID, Secret Key, and save changes.  

Ease of Integration

One of the biggest benefits of hosted payment gateway is the ease of integration. Hosted payment gateway solutions provide integration kits in all major computer languages like C++, Java, etc. 

Moreover, they provide easy to integrate SDKs for Android, iOS and ReactNative, Xamarin, etc. Furthermore, you might have a dedicated account manager as your single point of contact during onboarding. However, it is important to note that your payment success page may be customized or provided by the PSP. 

Facilitates Purchase

Customers prefer easy and quick payment methods while shopping online. They may cancel purchases if the payment process is too long or complex. A hosted payment gateway facilitates impulse purchases by offering a swift and effortless service.

Multiple Payment Options

While transacting with your business, customers would prefer different modes of payment. In fact, 7% of carts are abandoned because of a lack of preferred payment modes. 

While some customers pay through a credit card while others would prefer net banking. A hosted payment gateway offers them several options to pay.

Cashfree supports 70+ net banking options, UPI, credit card, debit card, NEFT, IMPS and 6+ wallet options including PayTM. 

Additionally, as the leading hosted payment solution, Cashfree payment gateway provides multiple bank EMI and cardless EMI options such as Zest Money, Buy Now Pay Later, ePayLater and Ola Money Postpaid. 

Cashfree allows you to accept international payments in 30 currencies including USD, GBP, EUR, AED and CAD for seamless cross-border commerce.

Fraud Management 

Customers are concerned about online payment fraud and may even leave a transaction halfway if they detect something dubious. Fortunately, third-party hosted payment gateways usually offer the latest technology to prevent fraud.

Merchants of all sizes use Cashfree ranging from individual freelancers to large enterprises. As a result, while the PCI-DSS compliance is a primary requisite for payment acceptance, we have gone a step ahead and incorporated a robust “risk management system” developed with the help of PayPal. 

Furthermore, merchants can store their customer’s information in the Cashfreee secure vault. Accessing stored cards across merchants can help your customers have a smooth and instant checkout experience thereby increasing successful transactions. 

Above all, hosted payment gateways offer data encryption to secure sensitive customer data against data breaches and malware attacks. A secure payment method boosts customer confidence in shopping at your online store as compared to a non-hosted payment gateway.

Choosing a Hosted Checkout Page

As a business owner, it is important to understand the payment gateway solution that is suitable to your specific requirements. As a result, there are some essential questions that you need to consider before deciding on a hosted checkout page include: 

• Are you planning to accept international payments? 
• Are you giving the option of a payment wallet such as PayTM on your checkout page? 
• For a smoother checkout are you planning to offer a “Buy now pay later” option? 
• Does your business offer the choice of multiple EMI to customers? 
• Do you need to collect recurring payments? 

Look for these features to help select a hosted payment gateway solution that suits you. 

Multiple Payment Modes

Like we mentioned above, the right hosted payment gateway will provide you with multiple payment modes. It is extremely important to provide the most popular payment methods as options to your customers. For instance, if you are accepting payments in India, you have to include UPI as a payment mode. Since UPI has surpassed all other payment options to become the most preferred choice for customers.

On the other hand, if you are accepting payments in the US or Europe, wallets like Paypal or Amazon Pay may be a popular choice of payment. 

International Payment Options

It is important to choose a hosted payment gateway that provides international payment support. Moreover, the payment gateway must showcase the product price in the customer’s preferred currency (Euro, INR or Dollars)

Most importantly. the hosted payment gateway solution must simplify settlements for you, the merchant. In other words, the payment gateway must convert the final payment amount to INR and settle it likewise.

Faster Settlements

Another important feature of a hosted payment gateway is fast settlement cycles. Once the customer pays, the Issuing Bank transfers funds to the payment gateway acquiring bank. Thereafter, the payment gateway transfers the funds to the merchant’s account. 

However, the time period between the payment gateway acquiring the fund and transferring it to the merchant is called the settlement cycle. Now, the hosted payment gateway settlement cycle may be T+2 to 4 days. Try to look for a payment gateway that offers T+ 2 day settlement cycle.

Furthermore, look for a payment gateway that offers Instant Settlement. This will allow you to access your funds 15 minutes after the fund capture. Cashfree allows merchants to access selective settlement as well. This means that you can select specific transaction and enable instant settlement for them 

Related Read: Payment Gateway vs Merchant Account

Easy Integration and Onboarding

Look for a hosted payment gateway solution that offers easy integration. 

Like we mentioned, most payment gateways come with SDKs for mobile apps and detailed integration guides in popular computer languages. Look for a payment gateway that also provides easy-to-use plugins for all major ecommerce platforms. 

Related Read: Payment Systems For eCommerce

Moreover, look for a hosted payment gateway solution that provides swift onboarding. Here dedicated account managers, live chats, and helplines will be useful. Most payment gateway solutions might promise onboarding within hours. However, opening a merchant account and KYC procedures might take up to 1-2 days. Hence, clear all your doubts with the payment gateway provider during or before onboarding. 

Hassle Free Reconciliation

Reconciling your payment can be quite a task. Look for a hosted payment gateway solution that makes it easy.

Look for a provider that provides you with a comprehensive dashboard. This dashboard will help you keep track of all your past transactions. Moreover, you can filter these transactions by volume, date and time, payment mode, merchant discount rate or net settlement. 

Furthermore, look for a payment gateway that can help you set up virtual accounts. In simple terms, a virtual account is a sub-account of one physical account. You can create virtual accounts for each of your customers and map it to your own account. This way, you will get real-time notifications of customer payments. 

Pricing

It is important to take the pricing of your hosted payment gateway solution into consideration. Look for a solution that offers your competitive pricing instead of cheap pricing. 

Moreover, try to go for a payment gateway that provides a comprehensive payment toolkit for your industry. For instance, as an e-commerce store, you might need to collect, disburse and reconcile payments. So, go for a PSP that provides payment gateway, payout and reconciliation services altogether. 

Cashfree Vs  Payment Gateways in India

Cashfree

Cashfree offers a 1.75% transaction fee, which is the lowest transaction cost of all major players. In addition, they provide 70+ different ways to pay. Settlements can be made instantly. Therefore, it is ideal for new companies or those that have a large volume of sales. Cashfree offers customisable solutions that are suited to the needs of all kinds of businesses, starting from startups and mid-size companies, to large enterprises. 

Competitors

They charge approximately 2 – 3 % transaction fee, and offer subscription-based services along with marketplace solutions. Some of the hosted payment gateway providers in India offer superior developer documentation. For this reason, many start-ups use their solution. Other providers are popular with  large enterprises as they support high dollar value transactions.

There are a few API first solution providers that allow the customers to easily handle global transactions through APIs and customize how the payment system works. However, they usually come with premium pricing making them less appealing to some customers.

FAQs

What are API-hosted payment gateways and local bank integration to PG?

The API (application programming interface) hosted gateways allow the customers to enter their credit or debit card details directly on the merchant’s checkout page. Thereafter, the payments are processed using an API or HTTPS query. 

The local bank integration payment gateway redirects customers to the bank’s website where they enter their payment information. Thereafter, it redirects the customer to the merchant website. The payment notification data is sent upon redirection. 

Is Cashfree the right hosted payment gateway for my business? 

Cashfree is the best hosted payment gateway in India for your business. You can accept international payments and take your local business to global platforms with Cashfree. As a result, this lowers your cart abandonment rate by offering a host of payment options and a seamless checkout process to your customers. You also get the benefits of easy integration with your platform, quick customer support, instant refunds, and attractive pricing.

What are the hosted payment gateway charges?

Hosted payment gateway charges in India vary from 2-3% per transaction. However, Cashfree is offering a hosted payment gateway in India at 1.75% for selected payment modes. This is the lowest hosted payment gateway rate in India. You can also opt for special payment gateway pricing depending upon your business category and order value.

For more details, view the payment gateway charges page.

What is the procedure for Cashfree hosted payment gateway integration? 

Merchants can integrate Cashfree payment gateway through web integration, Rest APIs, mobile integration, or eCommerce plugins in three simple steps:

1. Create a checkout form to capture details of each order.
2. Generate a digital signature to authenticate each payment request.
3. Submit the checkout form by entering an HTML tag or a Javascript code.

Are the hosted payment gateway charges deducted on a per-transaction basis? 

Yes. there is a per-transaction basis charge. This is the Transaction Discount Rate (TDR). It is deducted on the successful completion of each transaction. Cashfree deducts the TDR amount before settling the transaction amount to your bank account.

Are there any setup charges? 

No. Cashfree does not charge you a setup fee for integrating a payment gateway with your business. You can enjoy the service with Zero setup charges, AMC, and software upgrade charges.