Understanding the Difference between Payment Aggregators & Payment Gateways

Online transactions play a crucial role in modern business operations. For online businesses, having a reliable 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.

What is a Payment Aggregator (PA)?

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.

Examples of Payment Aggregators include PhonePe Payment Gateway, Stripe, and Cashfree.

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, Stripe, Cashfree

Payment Aggregators and Payment Gateways are often used interchangeably, although they serve distinct roles. PhonePe Payment Gateway functions as a Payment Aggregator.

What Should Businesses Choose?

Selecting a payment gateway or a payment aggregator depends on the specific requirements and preferences of your business. 

If you require a simple and secure solution for card-based transactions, a payment gateway might be adequate. 

Conversely, if your business requires you to enable multiple payment options, you can opt for a payment aggregator, which offers various payment methods, along with access to additional benefits such as robust customer support, and comprehensive business insights.