How to start a merchant services or payment processing company
August 12, 2025
12 min
Are you interested in helping businesses grow by enhancing their payment capabilities? Then, starting a payment processing business may be the perfect path for you. However, the journey towards industry leadership is strewn with obstacles, and making mistakes as a newcomer can be costly.
This guide walks you through everything you need to launch a merchant services company – let’s dive in.
What are merchant services?
We’ll start with the basic terminology every aspiring merchant services professional should know.
Merchant services (often called credit card processing) refer to a range of financial services that enable businesses to accept, process, and manage transactions from their customers. Merchant services providers equip retailers, e-commerce platforms, and other businesses with all the essentials required to accept payments effortlessly, including top-notch software, hardware, and professional support.
Merchant services are a jumping-off point for every business, enabling them to accept different payment methods, handle multiple currencies, and manage transactions. Partnering with a merchant service provider allows companies to expand their payment options and enter new markets with minimal effort. Such clear advantages generate a great demand for merchant services among businesses of different industries and sizes.
Why start a merchant services business?
The payment industry is one of the most vibrant and fast-growing corners of the financial world, expanding at a projected rate of around 13.9% between 2024 and 2029. Becoming a merchant services provider gives you access to a diverse client base – from local coffee shops to global e-commerce brands – and a revenue model built on residual income from every transaction. With a loyal client base, those fees become a steady, long-term income stream.
Types of merchant service models you can start
Before you become a merchant processor, decide your role in the payment ecosystem. There are three merchant services business opportunities you can consider.
ISO/MSP
One of the easiest ways to start a credit card processing company is by becoming an ISO or MSP. An Independent Sales Organisation (ISO) or Merchant Service Provider (MSP) acts as a reseller of merchant accounts and payment processing services, partnering with an acquiring bank or large processor. It markets to merchants, guides them through onboarding using the processor's systems, and provides support – but doesn't handle transactions itself.
The processor manages payments, settlements, and risk, while the ISO/MSP earns commissions or residuals from merchant fees. Because it doesn't directly process payments, the ISO/MSP avoids liability for fraud and chargebacks.
Payment facilitator (PayFac)
A PayFac is a "master merchant" that can quickly onboard sub-merchants under its own account. Unlike an ISO, it directly underwrites, approves, and manages merchants, handling onboarding, risk checks, transaction processing via its own tech, and settlements.
This model offers greater control and higher revenue per merchant but comes with higher costs, greater compliance burdens, and full liability for sub-merchants' activity. Stripe, Square, and PayPal are well-known examples.
Full payment processor/acquirer
The full processor or acquirer sits at the top of the chain, connecting directly to card networks, processing payments end-to-end, and holding merchant funds. It retains the full processing fee (minus card network costs) and controls pricing and policies. However, it demands strict compliance, significant capital, and large-scale infrastructure – making it a goal for established companies rather than a typical starting point.
Starting a payment processing company from scratch
Ready to break into a high-growth industry? Learn how to start a merchant processing company in 8 steps.
1. Understand the industry and market
Thorough research is your launchpad. Stay on top of payment trends, evolving regulations, security protocols, and new technologies. Identify where your offering fits and how you can differentiate.
Study your competition. Larger providers often attract enterprise merchants, but smaller firms can win by targeting local businesses and offering hands-on support.
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2. Define your business model
Clarify your proposition before you build. Are you offering a lightweight online gateway or a full-stack platform covering authorisation, settlement, and analytics?
Each model — ISO/MSP, processor, or PayFac — comes with its own level of complexity, regulation, and infrastructure needs. The key is to choose the one that fits your goals, resources, and timeline.
Based on the preferences of your target audience, determine the services that cater to their business needs. This may include traditional point-of-sale systems, payment gateways, online shopping cart integration, and merchant account assistance.
To find the best products and services to sell, examine your competitors' offerings and gauge customer satisfaction through online reviews and networking. There is nothing better than live communication with potential clients. It’s also an excellent opportunity to create a database of contacts for future sales.
3. Secure the right licences
Regulations vary by region, but most jurisdictions require licensing to operate legally as a merchant services provider. Research requirements, start the application process, and stay compliant.
You’ll also need to prepare your compliance documentation — AML/KYC policies, risk management procedures, and data security policies.
Prioritise risk management from day one. A single massive fraud incident or regulatory fine can wipe out a small company. On the flip side, a strong compliance track record can become a selling point when partnering with banks or appealing to larger clients.
Keep in mind that obtaining licenses can take from 6 to 12 months. Many startups begin as agents under existing PSPs before applying for their own license.
4. Partner with financial institutions
Your tech won’t function without acquiring and banking partners. Reach out to banks, processors, and PSPs with a clear value proposition.
Early-stage partnerships may start with just one acquiring bank. As you prove traction and reliability, your partner network can grow.
A new merchant services company often faces a “chicken-and-egg” issue: banks/processors want to see that you have merchants or an experienced team, while merchants want to know you have a stable banking backend. By securing a reputable acquiring partner and necessary integrations upfront, you signal reliability to prospective clients.
5. Build a technical layer
If you’re starting a credit card processing company from scratch, this is where the real work begins. You’ll be developing the core technology that powers everything — from the checkout API to transaction routing, settlements, and analytics.
Start with the foundation: a secure and flexible payment gateway that can handle different payment methods and currencies. Then, build the processing engine to manage authorisations, captures, and refunds.
As you grow, add smart routing and cascading logic to boost transaction success rates and ensure redundancy. Create a clean, intuitive dashboard for merchants to track transactions, payouts, and reports in real time.
6. Ensure compliance
When you start a payment processing company, compliance can’t be an afterthought. At a minimum, your platform must comply with:
- PCI DSS Level 1
- 3D Secure 2.0
- Data encryption and tokenisation
- KYC/AML requirements
- Fraud monitoring and audits
These measures protect both your business and your merchants.
7. Build operations and support infrastructure
Operational excellence is what turns working code into a trustworthy payments business. Set up dedicated teams for:
- Merchant onboarding and risk management
- Compliance and legal oversight
- Technical support
- Account management and sales
- Marketing and content strategy
Automate back-office processes wherever possible to save time and reduce errors.
8. Launch, test, and scale
Start with a small cohort of pilot merchants across different sectors. Use real transaction data to:
- Test platform reliability
- Validate routing performance
- Identify pain points
Merchant feedback is invaluable at this point. Encourage your early adopters to share their experience – everything from onboarding ease to dashboard usability and payout timing.
Once you’ve stabilised performance and ironed out friction, begin scaling operations gradually. Add new features and integrations, A/B test routing logic to optimise for region, card type, or transaction size.
As transaction volumes grow, data becomes your greatest asset. Use advanced analytics to understand conversion rates, detect fraud patterns, and forecast demand. Identify which acquirers perform best per region or industry and dynamically route traffic accordingly. Continuously refine your pricing and risk models based on this data.
Denys Kyrychenko
Corefy's Co-founder & CEO
How to sell merchant services to businesses
When looking at how to start a merchant services company, remember that breaking in without an existing payment network or merchant base can be challenging. Focus first on securing a few initial clients – this will give you credibility, real feedback, and a foundation to grow from.
Use those early wins to research your market, understand merchant pain points, and refine your offer. Position yourself not just as a provider, but as a trusted payment consultant who helps businesses find the right mix of solutions for their needs.
Build momentum through:
- Word of mouth from happy clients
- Networking and events to meet potential partners and merchants
- Strategic partnerships with web developers, banks, or service providers who can send you leads
Online channels like SEO, targeted ads, and a strong social presence can bring in merchants who are actively looking. When presenting your offer, clearly demonstrate the value they’ll gain – such as higher approval rates, reduced processing costs, streamlined operations, and increased revenue. Show them the tangible return they can expect from partnering with you.
If you decide to work with Corefy, we’ve developed an interactive ROI calculator you can use both to assess the benefits of our solution for your own business and to create tailored projections for your leads.
Starting a merchant processing business with a white label solution: pros and cons
Pros
- Fast start. It will take at least 2 years to develop your own software, obtain the necessary licenses and pass security and compliance audits. Added to this is the time it takes to hire a team, partner with financial institutions, and find the first clients. With a white label solution, you can get started in about a month without wasting time on the most time-consuming processes.
- Less costs. Developing software in-house requires major investment — often 20 times the cost of a ready-made solution. A white-label product removes the need to fund development, release, and support, making it far more cost-effective.
- No technical hassle. As we’ve mentioned, a white-label platform removes development and technical concerns. Your provider’s support team handles issues, freeing you to focus entirely on business growth.
Cons
- Opting for a white label makes you technically dependent on the solution provider, which means you cannot fully influence the product’s structure, features, and performance. However, given the huge market of white label providers, it won’t be difficult for you to find the best fit.
Essential tools & integrations for a merchant services company
Running a merchant services company requires a unified, customisable infrastructure that works for your merchants and frees your team from manual, repetitive tasks. That’s exactly what our PSP client from Eastern Europe achieved after switching to Corefy, moving from a basic gateway setup to a complete white-label payment ecosystem.
Here’s what they got:
- White-label merchant management system enabled them to offer their merchants a user-friendly merchant back office under its brand, allowing them to manage and monitor their transactions. In turn, the client received an accounting tool to keep records of third parties' payments, payouts, and balances, with flexible and configurable fee management.
- A single API connection gave PSP’s merchants instant access to 500+ payment providers, so they integrate once instead of juggling multiple connections.
- White-label checkouts – secure, PCI-certified payment pages, fully customisable to match each merchant’s brand and user experience.
- Enhanced reporting capabilities – the platform gathers the data from all the disparate sources, brings it to a standard format, and enables reports generation and export for further analysis.
The bottom line
Starting a merchant services business is a long row to hoe, but with the right approach, you can encounter far fewer challenges. Instead of starting all processes from scratch, you can take your place in the market much more easily and quickly with a reliable white label provider.
If you’re looking to launch a payment processing company without the burden of development and huge costs, our white-label solution offers the fastest and most efficient way to make it happen. Provide advanced merchant services for online businesses within a few weeks, having 550+ connections established for you.
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