When choosing how to accept online payments, one key decision businesses face is whether to use a hosted payment gateway or an integrated one. Each option affects the checkout experience, security, compliance, and overall control of your payment process. Understanding the differences can help you select the right setup for your industry, customer base, and technical resources.
Hosted vs. Integrated Payment Gateways
- Hosted Payment Gateways redirect customers to a third-party site (like PayPal or Stripe Checkout) to complete the transaction.
- Integrated Payment Gateways keep the customer on your website, usually using APIs or embedded forms to process the transaction in the background.
If you prioritize ease of setup and PCI compliance, hosted gateways are ideal. If you need full branding control and seamless UX, integrated gateways are a better choice.
Let’s explore both options and how they affect the way your business handles payment gateways.
What Is a Hosted Payment Gateway?
A hosted payment gateway redirects the customer to an external payment service provider to complete their transaction. Once the payment is processed, the customer is sent back to your website.
Benefits of Hosted Gateways
- Simplicity: No need to handle or store sensitive payment data.
- Security: PCI compliance is handled by the payment provider.
- Quick to Deploy: Often requires little to no development.
- Reputation: Customers may trust third-party payment processors like PayPal or Stripe.
Drawbacks
- Branding Loss: Checkout experience is on another domain.
- Disrupted Flow: Redirecting can lead to cart abandonment.
- Limited Customization: Checkout page may not match your site’s aesthetics.
Examples of Hosted Payment Gateways
- PayPal Standard Checkout
- Stripe Checkout
- Square Online Checkout
These services are ideal for smaller businesses or those without in-house development resources.
What Is an Integrated Payment Gateway?
An integrated payment gateway connects directly with your website. Customers stay on your domain while the payment is securely processed in the background via API.
Benefits of Integrated Gateways
- Seamless UX: Customers stay on your site from start to finish.
- Full Branding Control: You design the checkout experience.
- Custom Logic: Handle subscriptions, upsells, and dynamic pricing.
Drawbacks
- Requires Development: Integration needs APIs and secure coding.
- PCI Compliance: You may need to meet certain compliance requirements.
- Higher Cost: May incur monthly fees or advanced fraud protection costs.
Examples of Integrated Gateways
- Authorize.Net (via API)
- Braintree
- Cathedral Payment
- Stripe API
For companies with development support and a need for custom checkout flows, integrated gateways offer flexibility and a better user experience.
Comparison Table: Hosted vs. Integrated Gateways
Which Is Right for Your Business?
Choosing between hosted and integrated payment gateways depends on:
- Business Size: Small businesses often prefer hosted for simplicity.
- Technical Resources: Integrated gateways require technical implementation.
- Brand Importance: Integrated gateways offer consistent UX.
- Product Complexity: Subscriptions and upsells often require integrated setups.
- Security Priorities: Hosted gateways handle most PCI responsibilities.
If you’re unsure about your technical capacity, many providers offer hybrid models. For example, Cathedral Payment offers secure payment forms that can be embedded on-site while still offloading sensitive processing to their secure environment.
Common Use Cases
When Hosted Gateways Make Sense
- Freelancers or small businesses with few SKUs.
- Service-based businesses needing quick payment links.
- Sites where brand identity during checkout is not critical.
When Integrated Gateways Are Better
- Subscription-based businesses.
- eCommerce stores with upsell/cross-sell logic.
- Enterprises that value complete branding and analytics control.
Security and Compliance Considerations
PCI DSS compliance is the biggest factor here. With hosted gateways, the payment provider assumes most of the responsibility, while integrated gateways require you to ensure secure data handling and possibly undergo PCI audits.
Most modern providers (including Stripe, Authorize.Net, Braintree, and Cathedral Payment) offer tokenization and hosted fields that can reduce PCI scope even for integrated setups.
Cost Considerations
Different models have different pricing structures. Hosted gateways may charge per transaction only, while integrated ones might charge:
- Monthly gateway fees
- API access charges
- Fraud detection and chargeback prevention fees
For a breakdown of cost structures, refer to our Payment Gateway Fees comparison.
Choose Based on Growth Stage and UX Priorities
If you want to get started quickly with minimal overhead, a hosted solution is the best choice. If you plan to scale, offer subscriptions, or run an online store, an integrated payment gateway gives you more control.
Regardless of your choice, Cathedral Payment supports both models with secure, PCI-compliant systems tailored to your business.
Visit Cathedral Payment to learn more about how our gateway can help you scale safely and securely.
