How to build your own payment gateway from scratch: 5-step guide

Any business that sells products or services online or allows customers to replenish accounts within the service needs a reliable payment processing partner. And it's not a problem – companies can entrust their online payment processing to a payment gateway solution.

In previous articles, we've explained what payment gateway software is and why businesses need it. Now let's dig deeper: is it better to opt for a ready-made online one or build your own payment gateway from scratch?

Why create your own payment gateway?

If a business has a little turnover and doesn't use multiple payment methods – for instance, only bank cards, then setting up payment acceptance is quite simple. Difficulties may arise along with scaling – when the number of transactions and new payment methods grow, and there is a need to accept international payments. The larger the scale, the more nuances and tasks must be addressed. And they may not be evident at first glance. Such a situation may give business owners an impulse to think about building their own payment gateway from scratch.

Who may need to build a payment gateway solution?

• Online businesses with large turnover;
• Those who want to be independent of third-party payment providers;
• Scaling payment providers;
• IT companies that want to become a PSP;
• Acquiring banks aiming to improve their front-end solution.

Pros & cons of payment gateway development

Pros

• Lower expenses. While utilising a ready-made gateway solution, each transaction is liable for processing fees. If you build a payment gateway, you'll relieve this burden and reduce payment processing costs.
• Custom features. Building your own gateway solution allows you to add any features according to your specific business needs.
• Additional source of income. You can become a payment service provider for other merchants by owning a payment gateway. Charging them with registration and transaction fees will provide you with an additional revenue stream.

Cons

• Development time. Although building a payment gateway from scratch provides many benefits in the long run, it requires tons of resources. Before you start using your solution, you'll have to spend up to several years on preparations, development, testing, and a lifetime on maintenance of the product.
• Compliance costs. Processing payments via your payment gateway requires complying with the PCI DSS. The certification procedure is quite long and cost-expensive, but this compliance is strictly required.

How to create your own payment gateway in 5 steps

When it comes to building a payment gateway supporting popular payment providers, the process comprises four main parts:

• Infrastructure
• Development
• Security & compliance
• Integrating the right payment partners

Here are the steps to becoming a payment provider:

Step 1. Infrastructure

It's possible to host your solution on a third-party server or prepare your own. If you opt for the latter, you'll be totally your own boss but with the need to reaffirm your PCI DSS compliance annually. In case you want to utilise a third-party server, you may opt for AWS.

Step 2. Integration & development

After unfolding the infrastructure, you'll need to establish connections with acquiring banks, processors, and other gateways. To do this, you'll need their API documentation with instructions. Then comes the time to develop an external API for your solution to interact with others. Having many partners in the payments industry is required to be a competitive payment gateway.

Step 3. CRM system

This powerful tool will help you monitor all the necessary metrics and make more informed decisions about your business performance and development.

Step 4. Tokenisation

This is an essential step for secure payment processing and dealing with sensitive payment data. With tokenisation, merchants get rid of storing credit card data – it is stored on a gateway's side. It also allows for convenient and secure recurring charges, for the payment details are stored as a token.

Step 5. PCI DSS compliance

Dealing with online payments requires strict compliance with modern industry standards, and PCI DSS is one of them. To get the certificate of PCI DSS compliance, you should undergo the PCI audit. This is a costly procedure, and audits are required annually.

How to create a payment gateway and make it competitive?

Given the high level of competition in the payment market, your solution must be scalable and comprise a range of features to fulfil clients' needs. These tips will give you a hint on how to maintain competence:

• Provide a range of connections with different payment processors to attract more merchants.
• Allow for flexible customisation to be attractive for various online businesses.
• Ensure reliable customer support to help clients solve even minor issues in a snap.

When creating your own secure payment gateway, you need to be prepared for high costs. It isn't easy to name the exact price, for it depends on various factors, but it can reach hundreds of thousands of euros. This price includes the cost of the development and support team salaries, obtaining a certificate of PSI DSS, documentation, office equipment, etc.

At Corefy, we offer the white label payment provider solution that allows you to get started within a shorter time and with fewer costs – about a salary of 1 developer only. Instead of spending years and hundreds of thousands of euros on your own payment gateway development, you can opt for a ready-made solution. We have developed this holistic secure payment gateway solution to enable you to accept payments, make payouts hassle-free, and concentrate on your business performance and development. We also provide full support and maintenance for you not to dive into the technical details. Do you want to see how our online payment gateway works with your very eyes? It's easy – book a live demo.