Payment Gateway Cloud

Ecosystems

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on May14

In our previous article we described collaborative payment processing, based on payment gateway cloud concept. Although payment gateway cloud concept is a new one, it incorporates the results of a long evolution of payment technologies. This evolution was spurred and directed by the needs of merchants and other payment processing industry users. In order to understand it better, we are going to analyze it in comparison to a similar evolution process, which took place in web hosting industry.

Shared hosting – Payment gateway

Small online businesses and bloggers often face the need to create and maintain their own web-sites. To save money, they use a classical shared hosting, where they create their web-sites, alongside thousands of other hosting users. A similar need in payment services industry is faced by startup merchants and (again) small-size businesses. An equivalent to shared hosting in payment systems world is integration with a payment gateway. Startup merchants use the services of such companies as Authorize.Net, Stripe etc.

Virtual private server – Hosted or white-label payment gateway

With time users of a shared hosting face its limitations resulting from throughput constraints, viruses, problems with server, caused by other people, unavailability of support personnel, etc. For some businesses these problems are tolerable, while others choose to go to the next evolutionary phase, which is the virtual private server (VPS), giving them greater control over their environment and less of impact from the actions of others. An equivalent from the payment processing world is a hosted payment gateway solution, where a payment gateway instance is allocated for a specific merchant or a group of merchants.

Often VPS-based solution is also better for web-design companies with many sites and clients because it provides them with greater control over the process. In the merchant services world web-design agencies have their analogues: payment service providers and payment facilitators. PSPs and PayFacs often search for dedicated hosted payment gateway instances, commonly known as white-label payment gateways.

Dedicated server / Licensed payment gateway

While virtual private servers do guarantee significant efficiency improvement, they have their own flaws, because physical hardware is shared among several virtual machines or appliances. As a result, new limitations become evident, particularly, in cases, when high availability and fault tolerance are required. In such cases, large business users switch from VPS to dedicated servers. In payment processing world the equivalent of a dedicated server is an on-premise license of a payment gateway and deployment of the gateway in the company’s own PCI-compliant environment.

Dedicated servers solve most of the problems of web-design agencies, large online businesses etc., but support of such systems is a very complex task. Similarly, in the payment processing world, to support a licensed payment gateway solution, one has to face new issues related to server hardware, PCI compliance, etc.

We should mention a particular problem, specific to payment technologies, that doesn’t exist in the web-site hosting world. We are talking about implementation of payment integrations (with banks, processors, gateways). From technical viewpoint, integration between a gateway and a bank should not take more than a month. However, in practice, as a result of human factor, lack of organization, bureaucracy related to certification agent assignment, and instability of test servers, the process may take 8 to 12 months. If you are not familiar with integration process, you can read about it here.

Payment gateway cloud

Until recently there was no solution, allowing businesses with on-premise gateway deployments (particularly PSPs and PayFacs) to reduce the costs associated with new integrations. However, a new technology (implemented by such companies as United Thinkers) does allow your business to solve this problem.

The idea of payment gateway cloud technology is that an existing payment ecosystem can implement protocols (for transaction processing, chargeback disputing, and merchant provisioning), that are supported by the cloud within itself. If these functions are implemented, the payment ecosystem becomes capable of communicating with any other ecosystem, also connected to the cloud, where these protocols are implemented as well. As a result, any node of the payment gateway cloud can use the local integrations, implemented by any other node of the cloud.

Conclusion

If you face regular problems with integrations and the need for more back ends, but do not have the time and funds to invest in respective development efforts, you can consider exploring a UniPay-backed payment gateway cloud technology.

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