Direct or hosted integration?
Payment gateway is a merchant service for an e-commerce application. Payment gateways fulfil a vital role in the e-commerce transaction process through authorising payments between the merchant and the customer. The payment gateway processes debit and credit card payments for e-businesses and online retailers.
The payment gateway can function in one of two ways: hosted integration and direct integration.
Hosted Solution:
Hosted payment pages and IFrames take the customer away from the website’s checkout page. Once the user clicks on the ‘pay now’ button they are redirected to a payment service provider (PSP).
Here the customer will fill out their payment details. Once the customer’s details have been checked by the payment gateway and payments have been authorized, they are then redirected back to the ecommerce website to complete the checkout process and view their orders.
Hosted solutions also reduce the PCI DSS scope as the transaction is taken off page which can be of benefit. On the other hand, there is a drop off as the customer can be presented with a payment gateway page that is very different to the website they were visiting.
This is where Iframes come in. To replicate the look and feel of the originating website to make the customer feel nothing has changed. Done well, this process works. Done badly, you can lose crucial sales.
Direct integration:
Direct integration enables merchants to capture the customer’s payment details on their own secure server and sends the customer’s details for the necessary fraud and security checks. It then clears payment with the merchant’s acquiring bank and sends the responses back to your website.
The customer purchasing online, will never leave the website. This can be great if you do not want to invest in Iframe designs and try to pull a seamless checkout process together.