Hello,
"Vendor paid directly" is a global setting which define the rules of how HikaMarket should calculate the fees.
When you use that setting, you want to use a manual payment plugin (like "collect on delivery"), or an "adaptive payment plugin" (like Paypal adaptive, even in "classical mode" which use the standard Paypal API but send the payment to the vendor instead of the store).
Afterwards, you can use the mode when you can use any payment method but you need to associate that method with a vendor.
In the backend you'll see a specific block above the restrictions.
In the front-end, if you activate the setting, you can authorize your vendors to create and manage their plugins.
That last mode is more advanced and really provide the interface configuration to the vendor ; so he can enter its credentials etc.
All Payment plugin which are compatible with the HikaShop 2.x plugin standard ( hikashopPaymentPlugin ) will work with that system.
The front-end interface propose the same features as the backend but it will force the "vendor" to the current vendor (while in the backend you can choose what you want).
Regards,