How to choose the right payment gateway (2024)

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If you are a growing business looking to streamline your customers’ payment process and improve your cashflow, you should now be quite sure that online payments via payment gateways are the best way to go. Payment gateways not only make it easy for your customers to pay you, these payments reflect instantly on your end and improve your cashflow.

How to choose the right payment gateway (1)

To start receiving online payments, you need a secure system in place, that will let you handle sensitive customer information–and in essence, this is what a payment gateway does: it authorizes online payments and charges your customers’ credit cards securely.

Payment gateways accomplish this by doing three things:

  • Validating customers’ credit card details securely.
  • Making sure enough funds are available to complete transactions.
  • Approving transactions and transferring the amount to your account.

All of this is taken care of in encrypted payment gateway servers, so that you are absolved of the liability of holding sensitive customer data.

How do you start receiving payments?

To start receiving credit card payments, you need three things: a merchant account, a business bank account, and a payment processor.

The merchant account is a temporary holding account that receives the payments from the payment processor and then transfers the amount to your own bank account. The merchant account temporarily holds the money to educe incidences of recalled payments. Setting these accounts up are part of the essential first step of the payment receival process.

There are two types of merchant accounts that each hold money in different ways:

Dedicated account: This type of account is set up individually for you and is similar to your bank account. There is a lot of underwriting involved and the account provider usually does a risk analysis before providing you with an account. Generally, you’ll have more control over a dedicated account: you can negotiate rates, set custom holding times, and more. It is ideal for brick-and-mortar stores that want to receive online payments.

Aggregate account: In this type of account, your money is held in a commonly shared account with other companies’ money. These are easier to get started with, but you have less control and can not negotiate transaction rates. It is ideal for e-commerce businesses.

Now, there are a few “modern” gateways that don’t necessarily require you to create a merchant account. These payment processors come with an integrated merchant account so that you don’t have to create one separately. The only catch is that they come at a slightly higher price. These gateways include – PayPal, Stripe, BrainTree, and others.

Factors to consider while choosing a payment gateway:

Choosing the right payment gateway for your business is an important decision. If you choose a gateway that doesn’t fit your business model, you might end up losing a lot of money and customers as well.

Here are the most important factors:


The most important thing you need to consider while choosing a payment gateway is the total cost that you’ll incur. The costs involved in using payment gateway comes in three types: set-up fee, monthly fee, and transaction fee.

To find the most cost-effective choice for your business, both the volume and value of your transactions need to be considered. Most payment gateways have a competitive transaction fee rate of 2.9% + 30ç. This might work well for businesses when the value of their transactions is often not that high; however, if they are, the transaction fees can increase your expenses significantly. If your business deals primarily in high-value transactions, make sure you look for payment gateways that offer their services for a set monthly fee and a low transaction fee.

Types of cards allowed

The most commonly used credit cards are Visa, MasterCard, and Amex. All of these card types are accepted by most payment gateways. However, if your customers usually pay you using other card types, such as a debit card or a Diners Club card, you need to make sure that your payment gateways support that card.

Holding time

Even though payments are usually approved almost immediately, the money is held for a few days before it is settled to your account. This is to allow for the handling of refunds and charge-backs. These holding periods can vary from 1-7 days depending on the payment service provider. You can choose to wait or get paid immediately, depending on your cashflow.

Multiple currency support

If you do business internationally, you need to make sure that your payment gateway can handle payments in different currencies and from different countries. It is of utmost importance to let your customers pay in their currency. You’ll also want to, check for fees involved in foreign currency transactions.

Recurring billing

If you run a subscription-based business, you need to pick a payment gateway that’s equipped to handle all the moving parts that go into recurring billing. Any provider you choose needs to be able to save and store customer details for future transactions, automatically charge credit cards on preset subscription schedules, and offer retry options for failed transactions. Otherwise, you may have to do all this additional work manually..

Hosted vs. non-hosted

A payment gateway can either be hosted off-site (the customer is taken to the payment processor’s website for them to enter their details) or non-hosted (the customer will be able to enter the details without leaving your website).

Each of these different modes of hosting payment gateways has its own pros and cons. One benefit of using hosted gateways is that they reduce the risk of storing sensitive information on your own site. Although this is a huge advantage, the downside is that redirecting your customers to another site adds another step to the payment process, making it longer than usual. If customers go through this lengthy process and the transaction fails due to a glitch or other error, they may become frustrated and not try again. For this reason, businesses with high transaction values prefer to have non-hosted payment gateways integrated with their stores.


When it comes to receiving payments online, because you’re storing sensitive financial information, the security of your payment gateway should be a high priority. Keep in mind that different payment gateways adhere to different security standards. Make sure that the gateway you choose is level-1 PCI DSS compliant. Some gateways come with fraud detection and other such screening tools to protect your business from fraudulent transactions.

Mobile payment support

A majority of customers shop using mobile phones and tablets now, so it’s important to select a gateway that can support payments made from mobile devices as well. This will give your customers the flexibility to pay you regardless of what device they use.


There are some payment gateways that set an upper limit on the transaction amount that you can process per month. This might not be a problem for small businesses. However, if yours is a business that deals with high value goods or processes a large number of transactions, you need to be aware of any such limits, as you may lose potential customers.

Integration with other systems

Finally, it’s worth considering if your payment gateway can connect with your invoicing or accounting software so that when an online payment takes place, the corresponding invoice will update automatically in your bookkeeping system. This will save you a lot of time and effort because you won’t have to keep track of payments and then manually update that payment information in your accounting system as it comes in

We have prepared this handy comparison chart to help you choose the right payment gateway for you.

How to choose the right payment gateway (2)

We hope this article helped you narrow down your choices considerably. If you still have any questions, let us know so we can help you choose the right payment gateway.


Using the right payment gateway makes collecting customer payments smooth and hassle-free. But finding a payment gateway that checks all the boxes takes a little more work. You’ll need to make sure that it fits your business’ needs, can be used in your region, allows you to receive payments globally (for the sake of your international customers), and hopefully comes at a convenient price. In addition to this, most businesses like to connect their payment gateways to an accounting system so that their books stay updated. That’s why we’ve made sure our online accounting software supports popular payment gateways that cover all these points, so that you have a variety of options to choose from to make accepting payments easier.

If you are a small business, consider trying out our free plan as a part of your payment management strategy.

How to choose the right payment gateway (2024)


How to choose the right payment gateway? ›

Cost or pricing is a significant consideration when choosing a payment gateway. Evaluate the types of fees, including setup fees, monthly fees, and transaction fees. Some gateways offer a zero setup cost option, like Razorpay, which can be advantageous for startups and small businesses.

How do I choose a payment gateway? ›

Cost or pricing is a significant consideration when choosing a payment gateway. Evaluate the types of fees, including setup fees, monthly fees, and transaction fees. Some gateways offer a zero setup cost option, like Razorpay, which can be advantageous for startups and small businesses.

What is enough to consider a payment gateway secure? ›

A secure payment gateway is a PCI-compliant tool that encrypts and tokenizes cardholder information to protect against data thieves. This tool can serve as a secure “checkpoint” for transactions from customers, further protecting the integrity of your payment systems.

Which is the best payment gateway? ›

Best Online Payment Gateways in India 2024
  • PayU.
  • Instamojo.
  • CCAvenue.
  • Bill Desk.
  • JusPay.
  • Airpay.
  • Cashfree Payments.
  • Zaakpay.

What is the checklist for payment gateway? ›

Test that all payment options are valid and functional and that payments trigger corresponding steps in the process. Check successful transaction messages to both the merchant and the customer. Be familiar with all of the terms in the gateway system.

Why choose payment gateway? ›

Payment gateways not only enable online transactions but also improve overall business operations. By providing a more secure and efficient transaction process, enhancing customer experience and facilitating global reach, payment gateways are an important component of digital commerce.

What is payment gateway with example? ›

A payment gateway is a technology platform that acts as an intermediary in electronic financial transactions. It enables in-person and online businesses to accept, process, and manage various payment methods—such as credit cards, debit cards, and digital wallets—in a secure and efficient manner.

What is normal payment gateway? ›

A payment gateway collects customer card information and encrypts it for later processing. A payment processor uses that information to charge the customers' bank or credit card provider.

What is a disadvantage of payment gateway? ›

Disadvantages. Payment gateways can be expensive. Transaction fees are usually charged on each transaction and additional monthly fees may apply. Payment gateways may require merchants to organise their own PCI compliance.

What payments are most secure? ›

Electronic checks are inherently safer than physical checks as they cannot be lost or stolen, and any eCheck also gains the encryption provided by the ACH as well as the ability to reverse your payments under certain circ*mstances.

Which payment gateway is most used in USA? ›

The top payment gateways in the US include Ayden, Stripe, GoCardless,, TrustCommerce and PayPal. Payment gateways are essential tools for any business, online or off. The purpose of a payment gateway is to accept and authorize credit card payments.

Which is the best free payment gateway? ›

Top Free Payment Gateways
  • PaySimple.
  • Dwolla.
  • Spreedly.
  • PayLane.
  • Sila.
  • CSG Forte.
  • Payrexx.
  • HighRadius.

Can I make my own payment gateway? ›

Building a payment gateway requires considerable technical knowledge. You'll need a team of experienced developers who understand not only how to build software but also how to navigate the complexities of payment processing, such as dealing with multiple banking APIs and integration with various ecommerce platforms.

What is the first step of payment gateway? ›

Step 1: Adding a Payment Gateway

Adding a payment gateway to your website or mobile app involves selecting a suitable payment gateway service provider and incorporating the technology into your website's checkout process. You can customise it to allow as many or as few payment methods as you want to accept.

How does payment gateway work step by step? ›

The payment gateway encrypts the card details and performs fraud checks, before sending the card data to the acquirer. The acquirer securely sends the information to the card schemes, which carry out another layer of fraud checks. After this, the schemes transmit the payment data to the issuer for authorisation.

What is the difference between payment and payment gateway? ›

A payment gateway is a network that collects, verifies and performs fraud checks on customer's credit card information before sending it to the payment processor. A payment processor is a service that routes a customer's credit card information between the customer's bank and the merchant bank.

Can I have my own payment gateway? ›

If you are a merchant that wishes to have their own payment gateway, you'll need a payment processor and an acquiring bank. Merchants already need a merchant account to accept digital payments, which are provided by acquiring banks.

What are the different types of payment gateways? ›

Types of payment gateways
  • Hosted gateways. These are provided by third-party services. ...
  • Self-hosted gateways. With these gateways, the transaction data is collected on the business's own website. ...
  • API-hosted gateways. These provide a simple checkout process directly on the business's website or app. ...
  • Local bank integration.
Jan 24, 2024

How much does it cost to use a payment gateway? ›

Payment gateways are typically bundled with payment processing services and usually involve a monthly subscription fee and a per-transaction fee. Subscription fees can cost anywhere from $0 to $99 or more each month. Per-transaction fees can be flat-rate or interchange-plus.

What is the average cost of a payment gateway? ›

What is the average cost of a payment gateway? The average cost varies widely, but most gateways charge a fee per transaction, typically ranging from 0.3 to 3.5% + a fixed fee depending on the volume of transactions. PayPal and Stripe have some of the highest fees.

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