VoIP vs. PBX: What's the difference?

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Your organisation’s communication setup directly impacts productivity, customer experience, and costs.

The two main voice options, VoIP (Voice over Internet Protocol) and PBX (Private Branch Exchange) offer unique approaches. One runs on the internet and enables your team to work from anywhere with a WiFi connection, while the other relies on traditional phone lines and on-premise hardware.

Let’s break down how each system works, what they cost, and how they stack up against each other. You’ll also find a decision checklist to help you determine which solution best fits your business today and as it scales.

TL;DR

• PBX systems rely on on-site hardware and traditional telephony, while VoIP uses the internet to deliver faster, more flexible, and cost-efficient business communication.

• VoIP’s cloud-based model eliminates hardware costs, integrates seamlessly with CRMs and collaboration tools, and allows teams to work from anywhere.

• While PBX systems offer reliability through landlines, they’re costly to scale and maintain, making VoIP solutions better suited to modern, growing businesses.

• Choosing between PBX and VoIP depends on factors like internet reliability, remote work needs, scalability goals, and your integration needs.

• For most organisations, VoIP delivers superior scalability, AI-powered automation, and future-ready connectivity that PBX systems can’t match.

What are VoIP and PBX phone systems?

Both PBX and VoIP systems power business phone communications, but the way they operate, scale, and connect your teams is very different.

On-premise PBX is a traditional phone setup that routes internal and external calls via on-site hardware. Early PBX systems relied on switchboards and landlines, allowing companies to manage multiple phone extensions from a single network. 

Over time, PBX evolved into IP PBX, which adds internet connectivity but still depends on dedicated equipment and maintenance. While PBX phone systems are reliable, they can be expensive to install, update, and scale as your business grows.

VoIP, by contrast, uses the internet to transmit calls digitally, no physical phone lines required. Calls are converted into data packets that travel through your existing internet connection, making the system faster to deploy, easier to manage, and far more flexible. 

And because VoIP operates in the cloud, teams can make and receive calls from any device or location.

Modern VoIP phone systems also integrate with CRMs and helpdesks, giving teams instant access to customer history, notes, and other valuable context. This connectivity enables smarter, more efficient communication, especially for businesses with remote or hybrid teams.

• Key takeaway: PBX systems are rooted in traditional telephony, while VoIP systems represent the next generation of connected, scalable business communication.

PBX and VoIP technology compared

When comparing VoIP vs landline or PBX systems, you should understand how each stacks up in cost, reliability, and long-term value. This VoIP vs PBX comparison highlights the main advantages and trade-offs between the phone systems to help you identify which setup aligns best with your business needs.

In-depth cost comparison

Budget plays a major role when deciding between VoIP and PBX systems. PBX requires upfront investment in hardware and ongoing IT support, while VoIP operates on a subscription model that lowers setup costs and simplifies maintenance.

The table below takes a closer look at how expenses typically differ between the systems.

Other factors to keep in mind when choosing between VoIP and PBX

Ask yourself the questions below to get a feel for which phone system is best for your company and make a final decision between VoIP vs. PBX.

What’s your current setup?

Start by assessing how your current phone system supports your day-to-day operations. If your PBX or IP PBX setup integrates smoothly with your tools and still meets your needs, there’s no urgency to replace it. 

But if it’s limiting how your team communicates, especially across remote or hybrid environments, it might be time to move on. And switching to VoIP is simpler than most people expect. 

Platforms like Aircall let administrators add users, configure settings, and go live in hours (not days), making the transition both quick and low-risk. Plus, you can integrate modern phone systems with your existing software in minutes.

Do you have reliable internet access?

Your internet connection is the foundation of your phone system’s performance. VoIP depends on a stable, high-speed connection to deliver clear, uninterrupted calls. If your bandwidth is strong, VoIP is the more flexible and cost-effective option.

However, if outages or weak connectivity are frequent, a PBX system may be more reliable. This setup can still route calls through traditional phone lines, though upgrading your internet will unlock the full potential of modern, cloud-based communication.

Does your team often work remotely?

For distributed or hybrid teams, VoIP is the clear choice. It lets employees make and receive calls from laptops, smartphones, or tablets, with no desk phone required. Whether your team is in the office, at home, or on the go, VoIP keeps everyone connected on one unified system.

The result? Customers can always reach the right person, and managers can monitor performance or access call data from anywhere. That level of flexibility simply isn’t possible with a traditional PBX setup.

Do you have plans to scale your business?

If you’re planning to grow, VoIP phone systems scale faster and more affordably than PBX. Adding users or numbers takes minutes, with no hardware or IT setup. Cloud infrastructure adjusts automatically as call volume rises, which keeps quality high. 

Plus, you get access to features that help you grow your operations without scaling your team. Aircall, for example, offers AI Voice Agent and AI Assist Pro, which automate routine calls and summarise conversations to help teams stay efficient as they expand.

What features does your business need most?

VoIP systems offer far more flexibility than traditional PBX setups. Features like IVR menus, smart routing, automatic transcription, and call tagging make everyday communication smarter and faster. 

Plus, the real-time analytics these systems offer give teams data-driven insights that PBX can’t match. This is ideal for teams that are focused on improving customer service and sales performance.

What does your existing tech stack look like?

If you already use tools like HubSpot, Zendesk, or Salesforce, a VoIP system connects them seamlessly to give your agents the context they need to hold better conversations. Incoming calls automatically surface customer details, notes, and history with no tab switching or manual lookup. 

Platforms like Aircall unify voice, chat, and CRM data help teams deliver smoother, more connected customer experiences.

Learn how to cut costs, reduce complexity, and improve performance. Read our guide on the ROI of Connected Customer Communications. 

Decision checklist: Choose the phone system that’s right for your business

Still unsure whether VoIP or PBX fits your business best? Use this quick checklist to help identify what to look for in a business phone system before you decide.

Choose a business phone system that will scale effortlessly with your needs

For growing teams, VoIP delivers the flexibility, scalability, and cost efficiency that PBX systems can’t match.

For example, when Perfect Strangers faced surging call volumes, Aircall’s IVR and call routing helped the team create an effective routing system to direct calls to available agents. 

“We needed something that was much more dynamic, given the fact that we were stepping into a much larger market,” says founder Mimi Aboubaker. ““As we think about scaling, working with Aircall is going to give us a level of intelligence and information that will help us improve our operations.”

And at Vuori, Aircall helped scale customer support from just one agent to nearly 50. Integrating Kustomer CRM unified all customer interactions, while call whispering and warm transfer improved service quality. 

“Since we switched to Aircall, our average CSAT has gone up 4%, which is fantastic,” says Senior Manager of Customer Service Chad Warren. “Phone calls are a big contributor to that because so many people want to be able to have those meaningful interactions and connect with a real person when they have a query.”

If you want a virtual phone system that’s reliable, intelligent, and built for growth, Aircall’s AI-powered VoIP solution is ready to scale with you.

Discover a VoIP solution that helps you scale your operations without having to expand your team. Try for free today. 

Frequently asked questions about VoIP vs PBX

Is PBX better than VoIP?

PBX isn’t necessarily better than VoIP, and which will be a better fit for your organisation depends on your needs and current setup.  

PBX systems can offer strong reliability if your internet is weak, but VoIP is more flexible, scalable, and affordable. For most modern businesses, especially those with remote or growing teams, a cloud-based VoIP solution like Aircall provides better long-term value and functionality.

Do you need a PBX for VoIP?

No, you don’t need PBX for VoIP. VoIP systems like Aircall operate entirely through the internet and don’t require physical PBX hardware. All routing and call management happen in the cloud, allowing businesses to make and receive calls from any connected device.

Does VoIP use a PBX?

Some VoIP systems use an IP PBX, which combines PBX features with VoIP technology. However, most cloud-based VoIP solutions eliminate the need for on-site PBX equipment while offering advanced features like IVR, call recording and transcription, and CRM integration.

Is PBX still used?

PBX is still used, but less often than before. Some organisations still use on-premise PBX for legacy reasons or in areas with limited internet access. However, most new and growing businesses are moving to VoIP for easier setup, remote accessibility, and reduced costs.

What is the difference between VoIP and hosted PBX?

VoIP transmits voice calls over the internet, while a hosted PBX setup is a cloud-based system managed by a provider. Essentially, hosted PBX combines traditional PBX features with VoIP technology.

What is the difference between VoIP gateway and PBX?

A VoIP gateway converts traditional phone signals into digital packets so analog phones can connect to VoIP networks. A PBX is a full internal phone system that manages call routing. Gateways extend PBX capabilities, while PBX structures the entire communication system.

Does VoIP use AI?

Yes. Many modern VoIP platforms, including Aircall, now feature voice agents and conversation intelligence tools. These automate routine calls, summarise conversations, and deliver real-time insights for improved sales performance and customer satisfaction.

Published on July 17, 2020.