When people think about their own payment gateway, they, usually, focus on technical aspects. In reality, the process of owning a payment gateway requires you to establish many interconnected processes and relationships. Only after you take care of all business and technical details, you can start accepting digital payments. The technological platform is just one piece of the puzzle.
10 steps towards your own payment gateway
Start by focusing on what really matters:
Decide, what type of merchants you want to work with. Thus, you will know, which your target MCC codes are and what payment gateway functionalities you have to support. Does your business involve high-risk industries? If the answer is positive, then remember: acquirers are often reluctant to provide merchant account services to high-risk merchants.
Decide which countries and currencies you want to support. Do you want to accept payments in different currencies? Or do you want to authorize transactions in different currencies, but settle them into the same account? Remember, the more currencies you want to offer, the more challenging the process can be. The same applies for different geographies. As they say, “banks are charging money for moving money”. Processing of cross-border transactions costs more, because it involves additional banking institutions called correspondent banks. Check out our respective article on cross-border transaction processing to learn more.
Locate Acquiring Partners. Acquiring partnership is, probably, the most important one in the whole process. It is your backbone and your point of entry into the banking system at the same time. If your company is not authorized to issue merchant accounts, you need a partner that can provide merchant account services to the merchants from your portfolio. It also has to support your target currencies. True, sometimes, your payment gateway partner can help you with this. However, typically, you should ask for this explicitly.
Find a payment processing platform or payment gateway that meets your industry-specific needs and is open to collaborating with your acquiring partners. Presently, the main principle that payment platforms try to follow is robustness and flexibility. So, go for a platform that you can customize in accordance to any potential challenges and needs.
Discuss the integration process with your acquiring partner. Request the specifications your payment gateway should use to connect to the bank or switch.Ease of integration is no less important than the amount of transaction processing costs and gateway fees. Companies, that neglect this fact, often incur unnecessary losses and make costly mistakes along the way.
Provide integration specifications to your internal development team (if you build your own solution) or the payment gateway vendor. Define the flavor of your own payment gateway that best suits your business model and needs. The different flavors of payment gateway solutions you can call your own are outlined in the next section. And in our respective white paper.
Discuss with those responsible for the future gateway service any technical limitations, timelines, and costs. Don’t forget about hidden, indirect, and opportunity costs. The rule of thumb is simple: savings and benefits should offset costs and risks. Otherwise, the whole payment gateway project makes no commercial sense.
8. Partnership strategy
Come up with an integration strategy for your future merchants and partners. And devise a migration strategy for your existing customer base. Alas, some merchants might have to be “dropped”, because your new partners do not support their MCC codes. Or you might decide to migrate only a part of your merchants and leave the other part on the existing platform.
Execute agreements with the acquiring bank, payment gateway service provider, and PCI assessor as needed. Devil hides in the details, so stay alert and take the trouble to read, discuss and analyze everything. Even the sections and paragraphs in small print. Thus, you will prevent misunderstanding and, again, costly mistakes in future.
10. PCI status
Decide whether you need or want to undergo a PCI assessor and if so, find an appropriate auditor. As contactless times call for contactless payments, payment security becomes even more important. Payment processing for internet businesses rises to the new state-of-art level. PCI standards council is devising new ways to protect cardholder data. New update of PCI compliance rules is scheduled for mid-2021, so stay tuned.
4 technical aspects of having your own payment gateway
Choosing a technical platform is the most crucial step in this process of implementing your own payment gateway project. Here are the four options you have available, depending on your budget and goals:
1) Integrate with a processor. Are you going to deal with a single acquiring partner and, therefore, a single processor? Well, then you can integrate directly with their platform or use a platform they recommend. But remember: processors often use mainframe legacy platforms, tying you to a single point of connection to banking system.
2) Build your own payment gateway “from scratch”. If you have the available resources and at least one year, you can build your own gateway solution. According to rough estimates, building a viable payment gateway product costs at least $150,000. It is a custom payment gateway product, though. Plus, you don’t have to pay any gateway fees.
3) License PG source code. Let us assume, you have development resources, but are a bit short on time. Well, then you can license the source code of an existing product. After that you will deploy it in a PCI certified environment of your choice. This “flavor” requires less resources, but promises almost unlimited customizability potential.
4) White Label PG. If you lack resources and have a short timeline, you can use a White Label PG as your initial solution. This option works best if your transaction volume is not large and you do not have any sophisticated needs. It also allows you to reduce your PCI scope.
Once all these steps are complete, you stand a reasonable chance of owning your own payment gateway solution. Keep in mind: you can always reduce your risks and shorten your time to market by using a White Label PG. Ask the UniPay Gateway team about a demo of our White Label PG and PG source code to see how we can help with your payment processing needs.