Introduction
In today’s fast-paced digital world, businesses need reliable ways to accept payments online. Whether it’s a payment gateway or a payment aggregator, these tools are transforming the way transactions are processed, making it easier for businesses to thrive in the online space. But what’s the difference between the two, and which one is right for your business? Let’s dive in!
What is a Payment Gateway?
A payment gateway is software that processes payments online. It is used only for online transactions and offers limited payment options. In India, many banks, such as Axis Bank, HDFC, and Union Bank of India, serve as payment gateways.
What is a Payment Aggregator?
A payment aggregator, or merchant aggregator, is a company that helps businesses accept payments easily. With a payment aggregator, merchants can accept payments through multiple modes – saving them from the hassle of setting up complex logistic systems on their own.
Under the payment aggregator model, merchants can process transactions through the aggregator’s Merchant Identification Number (MID). This means you don’t need to open a separate merchant account. The payment aggregator handles everything for you, charging a small fee for the service.
Innoviti is one of the finest examples of payment aggregators, as it recently received an in-principle permit from the RBI to act as one. It’s important to know that while payment aggregators can also function as payment gateways, payment gateways don’t offer the broader range of services that payment aggregators provide.
Difference Between Payment Aggregator and Payment Gateway
A payment gateway processes transactions as an intermediary between customers and banks, while a payment aggregator serves as the interface where these transactions occur. Many payment aggregators, like Innoviti, India’s largest collaborative e-commerce platform, own payment gateways to offer extra services to their merchant customers. Innoviti provides a range of tailored solutions to meet business needs—explore their offerings to find the right fit for your business!
Advantages of Payment Aggregators for Businesses
Quick Setup:
Payment aggregators provide an easy and quick setup process, enabling businesses to start accepting online payments without delay.
Easy Integration:
Integration with payment aggregators is often user-friendly and doesn’t require extensive technical knowledge. This ease of integration can save businesses time and resources.
Reduced Compliance Burden:
Payment aggregators take care of many of the regulatory and compliance requirements that businesses need to fulfill. This makes things much easier, especially for small business owners who might find these rules hard to understand.
Aggregated Merchant Accounts:
Payment aggregators work by grouping many businesses under a single merchant account. This shared infrastructure reduces administrative overhead, helping small and medium-sized businesses start accepting online payments more easily.
Faster Onboarding:
With payment aggregators, businesses can sign up and start using their services faster than with traditional setups. This quick process is important for businesses that want to start selling online right away.
Cost-Effective for Small Businesses:
Payment aggregators are usually cheaper to start with and don’t require a long-term contract. This makes them a good choice for small businesses and startups that might not have a lot of money to spend.
Access to Multiple Payment Methods:
Payment aggregators let businesses accept different types of payments, like credit cards, debit cards, digital wallets, and more. This helps businesses serve more customers by offering them the payment options they prefer.
Unified Dashboard:
Many payment aggregators provide a unified dashboard that allows businesses to manage transactions, view analytics, and access other relevant data in one central location. This makes handling payments much easier.
Risk Management:
Payment aggregators often include built-in risk management tools to help identify and mitigate fraud. This added layer of security can be beneficial for businesses concerned about online payment risks.
Scalability:
As businesses grow, payment aggregators can often scale with them, accommodating increased transaction volumes and additional features to meet evolving needs.
Payment Aggregator vs Payment Gateway
While your business needs both payment services, here are some of the subtle differences between payment aggregator and payment gateway. Check out the given table to get a clear understanding of the differences.
| Basis of Distinction | Payment Aggregator | Payment Gateway |
|---|---|---|
| Scope | Online/Offline transactions | Only online transactions |
| Primary Function | Acts as an interface | Acts as intermediary |
| Multiple Payment Options | Yes | No, limited payment options |
| Owned By | Generally, ownership lies with fintech companies and financial service providers | Banks, vendors, payment aggregators, etc. |
| Authorization | Payment Card Industry – Data Security Standard (PCI DSS) certification | RBI authorization under PSSA is required |
| Examples | Innoviti, Bill Desk, PayUMoney, etc. | HDFC, ICICI, Axis banks, Razorpay, etc. |
| Integrated Solution | Full integration is available here | Relatively less integration compared to aggregators |
Conclusion
While payment gateways and payment aggregators have their differences, your business needs both to handle payment transactions effectively. Choosing the right approach can feel overwhelming, but with Innoviti, merchants can access top-notch services. Enjoy faster online and credit card payment processing with ease, and provide your customers with a smooth, secure shopping experience today!
Frequently Asked Questions
Payment aggregators are popular with businesses because they are simple and easy to use. Merchants like them because there’s less paperwork, the application process is quick, and approvals happen fast, so they can start taking payments right away. They also offer clear and simple fees, making it easy for businesses to understand their costs. These features make payment aggregators a great choice for businesses to collect payments easily
There are three types of payment gateways such as
- Hosted Payment Gateways
- Self-Hosted or Pro-Hosted Payment Gateways
- API Hosted Payment Gateways
Before choosing the right payment gateway for your business, think about important factors like security, compliance with rules, data analytics, and how easily it can be integrated into your system. Picking the right gateway helps your business grow and keeps your customers happy.
To use payment gateway services, your provider charges a fee. These fees can include an initial setup fee, an annual maintenance fee, the Merchant Discount Rate (MDR) (a small percentage of each transaction), and integration fees for connecting the gateway to your website. Other charges may also apply depending on the service provider.
For offering the payment gateway processing services, your service provider charges a fee. The different components of payment gateway charges comprise initial setup charges, yearly maintenance charges, MDR, integration charges for your online website and gateway integration, etc.