Hosted Payment Gateway – Meaning, Uses, Benefits & How It Works


Want to understand hosted payment gateway? Click to read a detailed guide to meaning, features, uses & working of hosted payment gateway solution.


Introduction 

As a business owner, a crucial aspect of optimizing your eCommerce business for the new normal involves adapting to all online payment methods. While customers may want to pay you using net banking, credit card, debit card, UPI, or an online wallet, their focus is on a safe and error-free transaction. A payment gateway ensures that payment gateway processing is secure allowing you and your customers, much-needed peace of mind.  

hosted payment gateway

What Is Hosted Payment Gateway?: Hosted Payment Gateway Meaning

hosted payment gateway

Looking for hosted payment gateway meaning? In simplest terms, a hosted payment gateway is a third-party-owned software that authorizes you to collect payments from your customers into your bank account. It uses encryption during each transaction. This ensures that the correct order amount is securely debited from the payer’s account through an online portal and transferred to the receiver’s bank account. 

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 payment gateway

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.

Benefits of Hosted Payment Gateways

hosted payment gateway

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. 

hosted payment gateway

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.

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.

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. 

hosted payment gateway

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

Hosted Payment Gateway

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 ecommerce store, you might need to collect, disburse and reconcile payments. So, go for a PSP that provides payment gateway, payout and reconciliation services altogether. 

Hosted Payment Gateway

Takeaway

A hosted payment gateway is an optimal solution for your online business. It is quick and easy to set up and the merchant can manage it from a technological point of view. A hosted payment gateway like Cashfree allows you to invest time and efforts in your business while the merchant processes your payments and maintains a record for your reference. The checkout process is simplified through the payment gateway, as customers have the option to pay as they wish.                                                                                                                                                                                                             

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.

hosted payment gateway