Payment gateway integration guide: Payment APIs compared

Whether you run an online store, marketplace, OTA, or booking platform, you need a way to get paid online. By 2026, non-cash transactions will hit 281 billion in North America alone. Integrating payment gateways is vital for processing those transactions – and it’s something only a seasoned developer can do. But before hiring a developer, knowing which payment gateway works best for you is a must if you want to make an informed decision.

In this guide, we'll share everything we know about payment gateways and compare popular payment system integration options.

What is a payment gateway?

A payment gateway is a service that securely processes online payments, so your customers can buy your stuff using debit, credit cards, or other payment methods. Think of it as a digital cash register for your website. 

A payment gateway defines the workflows of your checkout process. More than 22% of customers abandon shopping carts because of a complex checkout. The right payment integration can reduce your abandonment rate. Surprised? Let’s see how it works.

When a customer hits that "Buy" button, the payment gateway encrypts sensitive info (like credit card details) and provides it to the bank for approval. In just a few seconds, it checks if the funds are good, makes sure everything's legit, and gives the all-clear for the purchase. The best part? Your customers barely notice all this happening. To them, it's just click, confirm, and done. 

By keeping things simple and secure, you're more likely to turn browsers into buyers and keep them coming back. Before we get to the best options and necessary features, let’s figure out what types of payment gateways are there.

Types of payment gateways

Payment gateway types come in different flavors, each with its own perks. Whether you're running an online store or offering tech support, understanding these options is key to choosing the right payment integration for your business. 

• Hosted gateways

These act as a secure digital checkout counter. When it's time to pay, customers are redirected to a separate page hosted by the payment provider. Technically, this involves a server-side redirect (usually via POST) to the gateway's URL. After the transaction, the gateway sends a response back to your server.

• Integrated gateways

These keep everything under one roof, with customers staying on your website throughout the checkout process. Integration typically involves embedding the gateway's JavaScript library into your checkout page. This library handles the tokenization of card details, and API calls are made server-side to complete the transaction.

• API-based gateways

This tech-heavy option gives developers full control. It usually involves RESTful APIs with JSON payloads. Developers can implement features like recurring billing, partial refunds, or even custom payment flows.

• Mobile payment gateways

Designed for smooth mobile experiences, these often provide native SDKs for iOS and Android. They may support features like Apple Pay or Google Pay integration, and often use device fingerprinting.

• Self-hosted payment gateways

Your server collects payment information and forwards it to the gateway. This approach needs a secure payment form, usually with client-side JavaScript for basic validation. Server-side, you'll need to ensure proper SSL/TLS configuration and tokenization.

• Local bank integration

This method involves integrating with specific banks' APIs. It often uses protocols like Open Banking standards or country-specific APIs. Implementation typically involves OAuth for authentication and may require digital signatures for verification.

• Omnichannel payment gateways

These gateways provide a unified API for accepting payments across multiple channels — online, in-app, and in-store. They often use tokenization to create a consistent customer profile across channels.

When you choose a payment gateway, think about what matters most for your operations. Do you want the simplest setup possible? A hosted gateway is your best bet. Trying to keep customers on your site and reduce cart abandonment? An integrated solution is the way to go. Need total control over the payment process? Look into API options. Need to adjust your payments to on-the-go purchases? Opt for mobile payment gateway integration.

Core functions of payment systems integration

Despite the different types of payment gateway existing, the main functions of these solutions are similar. The main job of any payment gateway is to:

• Keep your info in check: payment gateways are all about security. Payment gateways are all about security. They use encryption to scramble your sensitive payment data. This usually involves SSL/TLS protocols and tokenization. It's like turning your card details into a secret code that only the right people can understand.
• Ensure the purchase is valid: before giving the green light to any transaction, payment gateways check if the card is valid, if there's enough money in the account, and if anything looks suspicious. This often involves AVS (Address Verification System) and CVV checks. Some gateways even use machine learning to spot unusual patterns.
• Move the money: once everything checks out, the payment gateway securely transports funds from your customer's bank account to yours. This happens through authorization and settlement. The whole thing usually takes just a couple of seconds, though the money might take a day or two to land in your account.
• Keep everything in the system: payment gateways keep detailed records of every purchase, which is helpful for bookkeeping, spotting trends in your sales, or sorting out any disputes that might pop up later. Many gateways offer real-time reporting dashboards so you can keep an eye on your cash flow.
• Ensure everything is consistent: A good payment gateway knows how to communicate with different systems. This usually involves APIs that let different software talk to each other. It makes sure everything is standardized and legit.
• Handling recurring payments. For businesses with subscriptions or repeat customers, many gateways can handle recurring billing. They'll securely store payment info and automatically charge customers on a set schedule. 

By taking care of all these tasks, payment gateways make sure money can flow smoothly and securely. Now that we reviewed what payment gateway functionality does, it’s time to find out how exactly it works.

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How a payment gateway works

We’ve already discussed the basics earlier, but to make an informed choice, you need to understand the process more thoroughly. Let’s break down how does online payment processing works into two logical stages.

Stage 1: Initiating the transaction

When a customer decides to purchase online, the payment gateway kicks into action. This first stage is all about securely capturing and transmitting the payment information. Here's what happens:

• The customer enters their payment details on your integrated checkout page.
• Your payment gateway immediately encrypts this sensitive information.
• The encrypted data is securely sent to the payment processor.

This initial stage is crucial for maintaining the security of your customers' data. By using a robust integrated payments solution, you ensure that sensitive financial information is protected right from the start.

Now, let's move on to what happens after the payment information has been securely captured and sent.

Stage 2: Authorization and completion

Once the encrypted payment data reaches the processor, a series of rapid communications occur to verify and complete the transaction. This is where the payment processing takes on the job:

• The processor checks with the customer's bank or card issuer.
• The bank either approves or declines the transaction based on available funds and security checks.
• This response travels back through the gateway to your website.
• If approved, the funds transfer process begins, moving money from the customer's account to yours.

During this stage, each type of payment gateway handles things slightly differently, but the core process remains the same. Some advanced gateways might even employ additional security measures or fraud prevention during this phase.

By understanding this two-stage process, you can see why choosing the right payment integration solution is so crucial. It impacts not just the security of transactions but also the smoothness of the customer experience and the reliability of your income flow.

Payment gateway vs. payment processor

What’s the difference between payment gateways and payment processing solutions? People often confuse these two, but they are not the same.

A payment gateway is the digital version of a cash register. It's the part of the payment system that customers interact with directly. Here's what it does:

• Collects payment information from the customer
• Encrypts this sensitive data to keep it safe
• Sends this encrypted info to the next stage of the process

Now, a payment processor is the financial algorithm behind the scenes. It doesn't interact directly with the customer, but it's essential for completing the transaction. Here's its job:

• Receives the encrypted payment info from the gateway
• Communicates with banks and card networks
• Verifies funds and authorizes transactions
• Handles the actual movement of money

Payment processors offer additional services like fraud detection and help with chargeback management, especially if you are using a micropayment processor for different transactions.

Imagine you're at a store. The payment gateway is like the card reader you use, while the payment processor is like the store's entire financial department working to make sure your payment goes through and the store gets paid. Now that we know how payment gateway works, let's dig a bit deeper.

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Comparing popular payment gateway options

Each of these providers offers unique features for integrating payments, but they all have their own strengths and weaknesses. We'll break down the key aspects of each, focusing on their pricing structures, integration options, and standout features to help you find the best fit for your payment integration needs.

Authorize.net

Authorize.net, a veteran in the payment industry since 1996, offers a stable and feature-rich platform trusted by businesses worldwide. It provides an Advanced Fraud Detection Suite (AFDS), a customer information manager for recurring billing, support for multiple currencies, and integrated checkout options. 

The payment gateway integration process with Authorize.net is more complex than some newer alternatives, but it offers more control and customization options.

Pros:

• Compatible with numerous banks and merchant accounts
• Robust fraud prevention tools
• Quality customer support

Cons:

• Additional monthly fee on top of transaction costs
• More complex setup process

Pricing: $25 monthly gateway fee + 2.9% + $0.30 per transaction for an all-in-one plan and $25 monthly + $0.10 per transaction for a payment gateway only.

Best for: Established businesses seeking a dependable, feature-packed integrated payment solution with robust security measures and customization options.

PayPal

PayPal has been around in online payments since 1998, offering a robust integrated payment solution trusted worldwide. It offers one-click payments for registered users and support for over 100 currencies, 10+ local payment methods, and debit/ credit card processing. What makes it great is the customizable integrated checkout options for a seamless user experience and seller protection policies.

PayPal's payment gateway integration process is straightforward and needs minimal technical knowledge. PayPal is used by millions of businesses worldwide, including brands like Airbnb, Spotify, and DoorDash. There are more than 400 million active PayPal accounts in the world.

Pros:

• Super well-known and trusted by customers
• Easy to set up, even for beginners
• Offers buyer and seller protection

Cons:

• Pricier than some competitors
• Sometimes holds funds for security checks

Pricing: The standard rate is 2.9% + $0.30 per transaction for US-based payments, with an additional 1.5% cross-border fee for international ones. Unlike Authorize.com, there are no monthly fees for standard accounts.

Best for: small to medium-sized businesses and startups seeking an easy-to-implement, globally recognized solution.

Square

Square has evolved into a comprehensive integrated payment solution for online and offline transactions. It offers an all-in-one payment processing and point-of-sale system with a unified integrated payment platform for both online and offline sales. Square stands out with its built-in analytics and reporting tools, as well as a free online store builder.

Square is popular among small businesses and independent sellers, but it's also used by larger companies like Whole Foods and Starbucks for certain operations.

Pros:

• User-friendly integrated payments system
• Includes additional business management tools
• Suitable for both physical and online stores

Cons:

• Not ideal for high-risk industries
• Less customizable than some alternatives

Pricing: The rate varies by payment method — 2.6% + $0.10 for in-person payments, 2.9% + $0.30 for online transactions, and 3.5% + $0.15 for keyed-in charges. No monthly fees apply to any account type.

Best for: Businesses needing both physical and online payment method integration, especially those in retail, food service, and professional services.

Stripe

Stripe has quickly become a developer favorite for its flexible API integration and extensive feature set. It offers a highly customizable checkout process and supports over 135 currencies. What sets Stripe apart is its advanced fraud detection using machine learning and robust tools for subscription and recurring billing.

Stripe's focus on API credit card processing and mobile payment integration makes it a top choice for businesses building custom payment experiences. Its payment integration API is known for being well-documented and developer-friendly. 

Pros:

• Highly customizable with powerful API
• Excellent for subscription-based models
• Strong security measures and fraud prevention

Cons:

• Can be complex for non-technical users
• Some features are geographically limited

Pricing: The standard rate is 2.9% + $0.30 per successful card charge, while ACH Direct Debit transactions are charged 0.8% (capped at $5 per transaction). High-volume businesses can access custom pricing packages.

Best for: Tech-savvy businesses and startups looking for a highly customizable payment gateway integration with robust developer tools and integrated payment solutions.

Amazon Pay

Amazon Pay gets the most out of the Amazon brand by offering a familiar experience for millions of online shoppers. It provides one-click checkout for Amazon account holders, fraud protection backed by Amazon's Protect technology, multi-currency support, and voice-enabled payments through Alexa.

The voice payment feature is extra valuable for businesses targeting modern consumers who are comfortable with voice-activated shopping or customers with special needs.

Pros:

• Trusted brand recognition from Amazon
• Streamlined checkout for Amazon account holders
• Voice-enabled payments for more accessible services

Cons:

• Limited customization options
• Some customers may hesitate to use their Amazon account for non-Amazon purchases

Pricing: The standard rate is 2.9% + $0.30 per transaction for US-based payments, plus a $0.30 authorization fee. International transactions incur an additional 3.9% cross-border fee.

Best for: Ecommerce businesses looking to capitalize on Amazon's vast customer base and streamline their payment gateway integration, especially those interested in the latest tech features like voice commerce.

As you see, the variety of off-the-shelf payment integrations is wide and diverse. However, sometimes you need to combine the best of two (or more) worlds to get features not available in one system. Here’s where custom online payment gateway integration will come in handy. Need customizable APIs together with analytics and voice commerce? COAX has all the expertise and proven success cases in creating integrated payment systems for eCommerce.

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How to integrate a payment gateway (for decision-makers)

Payment gateway integration is a complex technical task for software engineers, as they must know all the nuances of a specific payment system’s integration. While your developers will handle the technical details, decision-makers must grasp the basics of this process to plan the budget and build accurate expectations. Let's break down what you need to know to make smart choices.

Analyze your workflows and compliance 

Before diving into technical specifications or pricing comparisons, it's essential to understand your business's unique needs. The payment gateway process varies significantly across different industries and business models. Some companies need simple solutions, while others require complex integrated payment systems with multiple features and customizations.

Here are 5 things you need to consider before integrating a payment gateway:

1. Pricing and transaction limits

Look at the full picture — setup fees, monthly charges, and per-transaction costs. Some providers offer great rates for micropayment processing, while others shine with high-value transactions. Make sure the gateway can handle your business's range, from the smallest sale to the biggest.

2. Payment method versatility

Your gateway should support a wide array of options. We're talking credit cards, digital wallets, and even mobile payment integration. If you're selling globally, multi-currency support is a must-have for smooth international transactions.

3. Integration and API flexibility

How well does the gateway play with your current setup? Look for solutions offering easy website payment gateway integration and robust API payment integration options. This flexibility can be a game-changer to fit your unique needs.

4. Security and compliance

Security is non-negotiable. Look for a PCI DSS payment gateway (compliant with a global security standard) that offers strong encryption. Some providers even throw in fraud detection tools as a bonus.

5. Merchant integration and platform compatibility

Some providers offer built-in merchant accounts, streamlining your payment gateway integration process. Also, check if the solution is compatible with your product type (physical or digital) and your eCommerce platform. For example, some might offer additional communication gateways in e-business, offering easier support and troubleshooting.

Think about your growth trajectory, too — the solution you choose should scale with your business and accommodate future expansion plans. 

Now that you know what to look at, let’s see what ready-made solutions are in the market today, what pros and cons they have, what their payment gateway integration cost is, and what needs they cover for your business.

Tackle technical requirements for payment gateway integration

Modern payment integration API solutions offer various implementation options, from simple plug-and-play to complex custom integrations. The key is matching your technical capabilities with the right solution.

Focus on these elements:

• Platform compatibility requirements
• API credit card processing capabilities
• Resources available for implementation
• Security and compliance standards
• Integration timeline and milestones

Remember that the most sophisticated solution isn't always the best choice. Sometimes, a straightforward payment gateway without complexity can serve your needs more effectively than a feature-rich but complicated system. Our team of engineers can guide you through online payment gateway integration from A to Z. 

Analyze setup & operational cost of payment integration 

The true cost of a payment gateway goes beyond looking at transaction fees. The complete payment gateway business model includes various charges that impact your bottom line. Smart businesses look at both immediate costs and long-term financial implications.

Essential cost considerations include:

• Setup and monthly maintenance fees
• Per-transaction charges
• Currency conversion rates
• Integration and development expenses
• Ongoing support costs

Factor in potential savings from features like fraud prevention and automated reconciliation. Sometimes, paying more for a comprehensive solution can save money in the long run through reduced manual processing and fewer errors.

Follow payment gateway integration strategy

A successful integration process requires careful planning and systematic execution. Whether you're implementing a simple solution or a complex multiple payment gateway integration, having a clear roadmap is crucial.

Follow these implementation phases:

• Development environment setup
• Integration testing and validation
• User acceptance testing
• Performance optimization
• Launch and monitoring

Consider starting with a pilot program like Authorize.net Sandbox and Stripe’s test mode before full deployment. This approach helps identify and resolve issues before they affect your entire customer base.

Whether you're just beginning to explore payment gateway options or ready to upgrade your existing system, we're here to help. We understand that implementing a payment gateway isn't just about coding and technical specifications — it's about making your business more efficient and your customers happier. Our expertise in web development, UI/UX design, and automation testing will help you get the full advantage of the chosen payment gateway. 

Our clients’ cases speak for themselves. We successfully integrated payment gateways from various providers:

• Liqpay payment integration for a bus carrier
• Stripe and PayPal API integration for a marketplace
• Multiple payment integrations for a travel platform
• Stripe API integration for a transport booking service

So, if you need payment API integration for retail or API integration for travel – drop us a message and get a free project estimate within 48 hours.

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Tips for smooth payment integration

Choosing and implementing the right integration gateway is a big deal for your business. When starting out, remember that payment gateway integration charges and setup complexity can vary widely. Some businesses might even benefit from a multi-payment gateway approach to maximize flexibility and reach.

Your choice of payment gateway types will largely depend on your business model. For instance, if you're providing an online payment gateway for tech support services, you'll need different features than an e-commerce store. The key is understanding how to implement payment gateway in website architecture in a way that aligns with your specific needs.

Security should always be top of mind. Modern solutions come with robust security features, including PCI gateway compliance and encryption. Whether you're figuring out how to add payment method in website source code or looking to integrate payment gateway in website structures, there are plenty of resources and support options available. Finally, remember that success with payment processing methods isn't just about the technical implementation — it's about creating a seamless experience for your customers.

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FAQ

How do I connect payment gateway services to my existing website?

To integrate payments into website, start with obtaining online payment gateway API credentials, then proceed to installing libraries, and integrating the gateway's code into your checkout flow. The exact steps will depend on your chosen gateway and website platform.

What's involved in the first data payment gateway integration?

First, data integration requires setting up a merchant account, obtaining API keys, and implementing their SDK or API. The process takes 3-5 business days for account approval and another 1-2 days for technical integration, depending on your resources.

Can you explain what gateway services web payment solutions typically include?

Web payment gateway services bundle several components: transaction processing, fraud detection, recurring billing capabilities, and reporting tools. These services often include front-end payment forms and back-end processing infrastructure.

How complicated is it to implement integrated payment software?

The complexity depends on your technical expertise and chosen solution. Modern solutions often come with pre-built components and detailed documentation. Many providers offer plug-and-play solutions that can be implemented in a few hours, while custom integrations might take several days or weeks.

What are the basic steps to set up a payment gateway for the first time?

Setting up a payment gateway typically involves:

• Choosing a provider based on your needs
• Creating a merchant account
• Obtaining necessary API credentials
• Installing required SDKs or libraries
• Implementing the payment form
• Testing the integration
• Going live with real transactions.

How to integrate payment gateway in website architecture?

Register with a payment gateway provider, add their SDK to your codebase, implement payment forms, set up server-side processing, test in sandbox, and deploy with live credentials. This would typically be enough to understand how to add a payment gateway in a website.