Understanding the Difference between Payment Gateways & Payment Aggregators
3 min read
Online transactions play a crucial role in modern business operations. In 2024, India recorded 208.5 billion digital payment transactions, with UPI accounting for 83% of these. For online businesses, having a reliable digital payment solution isn’t merely a preference but a necessity for facilitating transactions. If you want to accept payments from your customers via methods such as credit cards, debit cards, UPI, online banking, etc., the first step is to search for a payment solution. During this process, you will encounter terms such as payment gateways and payment aggregators.
What is a Payment Gateway (PG)?
A payment gateway is a technology that enables businesses to accept payments from customers by serving as a bridge between a merchant and a bank. Businesses across various industries depend on payment gateways to facilitate online transactions.
When a customer purchases from an online store, your payment gateway securely encrypts and transfers the payment information from your customer’s bank to yours (the merchant’s account), ensuring that the purchase is completed smoothly.
Examples of Payment Gateways include Mastercard Payment Gateways (MPGS), HDFC Bank, ICICI Bank, etc.
A payment aggregator helps businesses with end-to-end payment services, simplifying the payment process by collecting information, processing payments, and handling refunds.
For instance, when your customer purchases something from your online store, a payment aggregator provides various payment options (such as UPI, net banking, and credit/debit cards). Once the payment is made, it verifies and processes the payments on your behalf.
Difference Between Payment Gateway & Payment Aggregator
Basis of Distinction
Payment Gateway
Payment Aggregator
Role
A payment gateway is a network that serves as a bridge between the merchant and the bank.
The Payment Aggregator is a solution that streamlines end-to-end payment processes.
Payment Options
Payment Gateways only allow card payments (debit/credit cards).
Payment aggregators offer multiple payment methods such as UPI, debit/credit cards, net banking, etc
Integration
The merchant must integrate each payment method or bank separately.
The merchant needs to integrate with just one service provider.
Services Provided
A Payment Gateway offers transaction processing services.
Payment Aggregator provides additional services such as access to comprehensive reports, customer support, etc.
Examples
Axis Bank, HDFC Bank, MPGS (Mastercard Payment Gateways)
PhonePe PG
Payment Aggregators and Payment Gateways are often used interchangeably, although they serve distinct roles. PhonePe Payment Gateway functions as a Payment Aggregator.
Selecting between a payment gateway and a payment aggregator depends on your business’s specific needs and priorities. If your main requirement is to process card-based transactions securely and efficiently, a payment gateway can be a suitable and straightforward solution.
However, if your business needs to offer customers a wide range of payment options such as UPI, digital wallets, debit/credit cards, and net banking a payment aggregator is the better choice. In addition to supporting multiple payment modes, aggregators often provide value-added features like robust customer support, detailed analytics, and streamlined settlements.
Platforms like PhonePe Payment Gateway offer such comprehensive digital payment solutions register today to explore more.
