What is hosted checkout, and should you use it for your ecommerce business?

The ecommerce checkout experience plays a big role in how customers perceive your business. A simple, quick process requiring minimal effort is ideal for reducing cart abandonment and encouraging repeat sales. For small and medium-sized businesses, hosted checkout offers an easy and affordable way to provide a smooth shopping experience.

What is a hosted checkout?

A hosted checkout is a page located on a third-party website and uses that website’s servers. It handles the entire checkout process, including:

• Collecting customer information.
• Processing payments.
• Generating payment confirmation or receipts.

Since the hosted checkout provider handles all the data, nothing passes through your network or gets stored on your local servers, reducing your compliance burden. 

Hosting the checkout process outside of your site can be a good option if you’re just starting out. Hosted solutions are available from many providers customers already trust. Plus, they’re easy to set up and integrate into your ecommerce store. Less time spent on setup means you’ll be ready to start making online sales sooner.

What’s the difference between hosted checkout and onsite checkout?

Onsite checkout lives on your website. The checkout process takes place on your domain and sends transaction information through a payment processor or gateway. This type of checkout typically takes more time to design, set up, and maintain, but it can have benefits for growing an established business.

How does the hosted checkout process work?

If you choose a hosted checkout for your ecommerce transactions, the first thing you have to do is integrate the solution into your site.

Once the basic setup is complete, you choose which payment options you want to accept and apply any customizations to the platform, such as adding a logo or brand colors. With the right payments partner, this should all be a fairly quick and straightforward process.

When a customer shops on your site, the hosted checkout experience goes something like this:

• Items are chosen and added to a shopping cart.
• The customer clicks a “checkout” or “buy now” button when he or she is ready to pay.
• The button redirects the customer to your hosted checkout page.
• The customer enters payment, billing, and shipping information, or uses an existing account to choose a payment method.
• The hosted checkout provides an opportunity for the customer to review the order.
• The customer completes the order and is redirected back to your website.

The entire process can take as little as a couple of minutes if you’re using a popular third-party solution which many of your customers already have accounts with. 

What are the pros and cons of hosted vs. onsite checkout?

Whether you choose hosted or onsite, you should aim to make the ecommerce checkout experience as seamless as possible. Hosted solutions can have numerous benefits for you and your customers, such as:

• Using a well-known third-party solution can increase customers’ trust of your business and brand.
• You don’t need extensive technical or coding knowledge to set up the checkout.
• You can quickly start accepting multiple payment types.
• More customers are likely to complete orders because of your simplified checkout process.
• Settings are easy to change and won’t affect your site’s appearance or performance.
• The hosted checkout provider is responsible for keeping customer information secure, which reduces your PCI compliance scope, limits liability, and minimizes fraud-related costs.

There are also drawbacks to using hosted checkout. These include:

• Some customers may be uncomfortable paying through a third-party site.
• Not all hosted checkouts offer a seamless experience.
• You can’t cross-promote other offers on the checkout page.
• You may not be able to collect as much customer data.
• Errors or confusing form fields could result in lost sales.

Onsite checkouts give you more flexibility in checkout page design. You’re entirely in control of form fields and page elements, including additional offers and opportunities to capture information about your customers. However, you’re also responsible for every aspect of data security (including PCI compliance) and you could suffer significant financial losses in the event of a data breach.

You may need to pay monthly fees in addition to transaction fees for both hosted and onsite checkout solutions. The actual cost depends on the provider, the included features, and the fee structure used for payment processing.

What should you look for in a hosted checkout provider?

If you decide to use hosted checkout, make sure it has the features and functionality you need. A good third-party checkout solution will:

• Easily integrate into the shopping process without interrupting the flow.
• Sync with other business systems, such as accounting and CRM software.
• Allow customization with your logo and brand messaging.
• Mimic the appearance and behavior of your site.
• Accept both domestic and international currencies.
• Offer the payment options your customers use most.
• Include a recurring payment option for subscription services.
• Provide accessible, knowledgeable technical support.

Hosted checkouts included as part of complete payment processing or POS solutions may have additional features, such as online storefronts, mobile payments, and business management tools.

Both hosted and onsite checkout options have benefits for your business when it comes to reputation, marketing, and customer satisfaction. If you want to get your ecommerce store up and running without extensive setup time or confusing back-end work, a hosted solution will meet your needs.

Evaluate your options through the eyes of your customers to find a platform designed to deliver the best possible experience and leave a good impression of your brand.