Online transactions are an essential part of businesses. Billions of transactions occur regularly. If you are an online business, having a reliable digital payment solution is not optional but a requirement. You need a payment solution to accept and settle payments. However, you will get confused between Payment Gateway and Payment Aggregator. Here in this guide, you will know the key difference between a Payment Gateway vs Payment Aggregator.
What is a Payment Gateway?
A payment gateway is a safe and secure technology. It allows and processes online transactions (Credit cards, UPI, Wallets) for websites as well as apps. It serves as a link between the client and the retailer. It secures the sensitive data and then transfers the data between banks to authorized entities.
What is a Payment Aggregator?
Payment Aggregator allows businesses to accept different payment modes (including cards, UPI, and wallets). It does not require each merchant to have their own separate bank account. It is a line intermediary between merchants and banks that processes transactions monitor security, and transfers funds to merchant accounts.
Payment Gateway vs Payment Aggregator: Differences
Basis | Payment Gateway | Payment Aggregator |
Definition | It is a technology that transfers payment data from the customer to the bank. | It refers to the service provider that enables businesses to accept payment without needing their own merchant account |
Role | It acts as a bridge between the merchant website/app and the bank | It acts as a middleman that collects payment on behalf of multiple merchants |
Merchant Account | Required (business must have its own merchant account) | Not required (aggregator provides a shared merchant account) |
Onboarding Time | Longer (due to bank approvals and KYC) | Faster (quick onboarding with minimal documentation) |
Settlement Process | Direct settlement from bank to merchant account | Aggregator collects funds and then settles to merchant |
Customization | High flexibility and control | Limited customization compared to gateways |
Best For | Large enterprises with technical resources | Startups, SMEs, and small businesses |
Examples | Razorpay Gateway, PayU Gateway, CCAvenue | Razorpay, Paytm, Finpass, Cashfree (as aggregators) |
Integration Complexity | More Complex | Easy and Quick Integration |
Cost Structure | Setup fees + maintenance + transaction fees | Mostly transaction-based pricin |
Advantages and Disadvantages: Payment Gateway vs Payment Aggregator
Payment Gateway
Advantages of Payment Gateway
- It offers high security by using encryption protocols like SSL/TLS to secure transactions and prevent fraud.
- It settles funds directly to the merchant's own bank account.
- It offers customization so businesses can customize checkout, payment flows, and integrations.
Disadvantages of Payment Gateway
- Require a Merchant Account: To use a payment gateway, businesses need to set up and maintain a separate merchant account with a bank.
- Compliance Burden on Merchant: The merchant should handle PCI-DSS, KYC, and regulatory compliance.
Payment Aggregator
Advantage of Payment Aggrgator
- No Merchant Account Required: Payment Aggregator provides a shared merchant account. It simplifies the setup process.
- Fast and Easy Onboarding: It is ideal for startups as it needs quick activation with minimal paperwork.
- All Payment Methods in One Integration: It supports all payment modes, including UPI, Cards, wallets, and net banking.
- Handles Compliance and KYC: Aggregator manages regulatory requirements and security compliance.
- End-to-End Services: It provides end-to-end services, including onboarding, transaction processing, settlement refunds, and analytics.
Disadvantages of Payment Aggregator
- Delayed Settlement: Because the payment aggregator first collects payment and then settles.
- Dependency on Third Party: Businesses depend on aggregators for uptime, settlement, and operations.
Which business chooses between Payment Gateway vs Payment Aggregator?
Choosing between a payment gateway and a payment aggregator totally depends on the business's needs and preferences. If you need high customization, international payments, or have very high transaction volume, a payment gateway is suitable. However, to accept various kinds of payment, you require a payment aggregator.
Conclusion
Knowing the key difference between a payment gateway vs payment aggregator is crucial to choosing the right payment solution for your business. Both offer several advantages and disadvantages. The above guide helps in answering all questions and choosing the right solution for your business.
FAQs
Ques: What is the main difference between a payment gateway and a payment aggregator?
Ans: A payment gateway processes and transmits payment data. On the other hand, a payment aggregator collects, manages, and settlers fund on behalf of merchants.
Ques: Can a business use both a payment gateway and an aggregator?
Ans: Yes, a business can use both a payment gateway and a payment aggregator.
Ques: Which is a more secure payment gateway or a payment aggregator?
Ans: Both payment gateways and payment aggregators are secure to use.
Ques: How to choose between a payment gateway and a payment aggregator?
Ans: A business should choose a payment gateway or a payment aggregator based on:
- Business Size
- Technical Capability
- Transaction Volume
- Need for control vs convenience
Ques: Can Payment aggregators handle refunds and chargebacks?
Ans: Yes, a payment aggregator manages:
- Refunds
- Chargebacks
- Disputes
- Settlement tracking