Key Takeaways:
Assessing Payment Gateway Needs: Companies must carefully weigh the need for their own payment gateway against the complexities, costs, and advantages. White label solutions offer faster deployment, cost-efficiency, and feature customization, while building from scratch allows tailored features but involves substantial time and costs.
Pros and Cons of Self-Established Gateways: Establishing your own gateway offers benefits like saving on fees, precise feature customization, and the potential to offer services to others. However, it demands time, substantial costs, and complex integrations and certifications.
White Label Solutions for Expedited Solutions: Licensing a white label payment gateway can expedite deployment, lower costs, and offer customization, utilizing established relationships with banks, making it an attractive option for many companies seeking quick and cost-effective solutions.
Costs and Banking Relationships: Owning a payment gateway involves significant initial costs (software licenses, tokenization appliances, audits, etc.) and necessitates strong banking relationships. Understanding costs, building or buying considerations, and banking relationships are crucial in making informed decisions.
Introduction
Only certain kinds of companies need their own payment gateway, and they need them for specific reasons, like saving on fees, having a precise set of features, or the ability to offer services to others. Building a gateway is a complicated but doable process that takes a great deal of time and involves significant upfront costs. For some companies, a white label payment gateway in a hosted environment may be the best choice. For those who want to build a gateway from scratch, however, it is important they understand the costs and complexities involved and understand the vital importance of a strong banking relationship.
Does your company really need it’s own payment gateway? Could a white label solution from an established provider be the best choice? And how does everything work if you want to set up something of your own? These are among the most commonly asked questions about payment gateways. Just as you must evaluate the complexities in building your own payment gateway, you must also evaluate whether it is necessary in your unique situation, and whether it is the best course of action for your company.
If you ever feel lost during this process or wish to speak with industry specialists, we offer a free payment expert consultation for you
In its simplest form, a payment gateway is software that allows you to accept and process customer payments. You can think of it as a virtual credit card machine. Payment gateway software costs a significant amount of money to build or license, yet it is essential to the operation of many kinds of businesses.
There are many payment gateway software choices available, but it is also possible to build your own. Each of the existing choices has its own list of benefits and shortcomings, and it can be time-consuming to determine which solution is right for your needs. Building your own payment gateway can be a practical way to get exactly the features you need. Licensing an existing product, however, may make more financial sense.
In any case, a payment gateway is more than a complex piece of software. It is a service offering that your business may need for its own purposes or to serve your clients.
There are many questions you need to consider when deciding on a payment gateway solution, Build or Buy, Hosting Options, PCI Compliance, Acquiring, Processing and Banking Relationships, as well as your individual companies ROI. The remainder of this article will provide some insight on these questions.
Do I Need My Own Payment Gateway?
Like most things, there are pros and cons to having your own payment gateway. A self-established payment gateway may be a smart investment for the following types of companies.
1
Established billing companies that are looking to replace failing and difficult-to-maintain legacy solutions.
2
Growing payment service providers that need a more full-featured and robust payment processing solution.
3
Software companies that want to expand their business by becoming a payment service provider.
4
Acquiring banks that need better, more up-to-date front end technology.
PROS
Save On Fees
Precise Feature Set
Offer Services to Others
CONS
Building Takes Time
Substantial Costs
Complications
Is a White Label Payment Gateway a Sensible Solution?
In many cases, financial institutions prefer this approach as well. Since relationships are already in place between the gateway provider and the banks, your company can benefit from these established relationships rather than having to build your own connections.
White label payment gateways can offer you a significant cost savings because the costs involved in developing the solution are spread across many customers. Since those other customers also demand reliability, you can be sure the system has dependability and robustness built into it.
What is a True Self-Hosted Payment Gateway?
- Maintaining your own data center
- Having maintenance personnel available at all times
- Dealing with an annual PCI compliance audit
In other words, everything is in your hands. Choosing an outside solution means that server maintenance and the PCI audit are handled by your hosting company. That leaves your in-house staff free to maintain your other critical systems and work on other duties.
Is it Possible to Save Money With My Own Payment Gateway?
Additionally, it may be possible in some situations to save on maintenance if you’re replacing a cumbersome and failing legacy system that has high costs involved in integrating with modern technology. Keeping staff to support obsolete or out-of-favor programming languages can be expensive.
Finally, some companies can actually make money by switching to a modern payment gateway setup if the switch allows for the ability to serve more customers since you have better technology. For example, quicker and more automated on-boarding can be one way of saving money on each customer and allowing you to take on customers you once believed undesirable because of high administrative costs and low profit potential.
How Much Might it Cost to Own a Payment Gateway?
Gateway Software License:
$50,000 – $250,000
Tokenization Appliance:
$50,000 – $100,000
Annual PCI Audit:
$25,000 per year
Monthly PCI Hosting Fee:
$3,000 – $5,000
Bank & Processor Integration:
$5,000 – $15,000 each
Why Are Banking Relationships Necessary?
The software must be connected to something to process the transactions. Even if that means connecting to Visa, MasterCard and other associations directly, you still need a relationship with an acquiring bank to settle the funds.
Banking relationships can be difficult to establish because large banks move slowly and sometimes fail to act with the same urgency you desire.
UniPay Payment Management Platform
UniPay Gateway is a white label open source payment processing platform which can be utilized by merchants with single and multiple merchant accounts, ISOs, PSPs, billing companies, software providers, etc. UniPay is made up of four modules, UniCharge, UniBill, UniBroker and UniRead. Each module provides functionality required by most businesses to successfully process transactions.
Choosing UniPay as your payment gateway ensures a reliable and flexible payment processing solution which combines sophisticated functionality with the simplicity of usage. UniPay will help you develop an effective payment processing strategy, save on processing costs, and, consequently, it will make your business more successful and profitable.
Established Banking Relationships
Card Present & Card Not Present
Processing
Multi-Industry Support
Advanced Support
Provides high quality support throughout the entire working relationship.
Conclusion
While this article does not provide a complete explanation of how to build a payment gateway, it may open minds to the questions that must be considered and put readers in the right frame of mind to make the complex decisions that are necessary along the pathway toward choosing or building a payment gateway.
Additional information on how to build your own payment gateway and explanations of many other payment processing industry concepts can be found on Paylosophy and UnitedThinkers.
