Introduction
In today's world, everything is digitalized and online is the new normal. All the business are shifting their operation from offline to online. When going from offline to online, you need multiple sets of things like a good website, social media presence, and, most importantly, a payment gateway to receive payment from the customers.
If you’re the type of business owner who likes to take full control over operations, you might consider building your payment gateway from scratch. This offers the highest level of customization, but it’s also important to remain realistic about the challenges involved. Here’s how to create a payment gateway for your website, as well as a few tips to keep in mind along the way.
What is a payment gateway?
Before you decide to create your payment gateway, it’s helpful to outline its intended function. A payment gateway is a system that allows your website to collect credit and debit card payments. It serves as the go-between for the customer, business, and payment processor. This entails providing a payment portal or checkout page for customers to submit their payment details, encrypting this sensitive data and passing it on to the payment processor or bank. When you create your payment gateway, you must keep these functions in mind and ensure it’s compliant with PCI requirements and the latest anti-fraud legislation.
So, which types of businesses might be most interested in learning how to create payment gateways? Typically, it will be larger businesses that don’t want to depend on a third party or those that are experiencing rapid growth and need a tailored solution to match their unique needs.
How to create a payment gateway
The specific steps to create a payment gateway will depend on your business needs, but most businesses will use a process like the following.
- Create your payment gateway infrastructure. You’ll need a server to host your gateway, whether it’s your own or via a third party. If you’re using your server, you’ll need to think about auditing and maintenance for any associated data centres.
- Choose a payment processor. A payment gateway works hand in hand with a processor to complete online transactions. This could be a financial institution, a card network, or an independent processor. In any case, you’ll need to ask for the processor’s API documentation and follow implementation instructions. You’ll also need to develop an external API that will facilitate the transfer of client payment data.
- Create a customer relationship management (CRM) system. With the nuts and bolts of payment processing in place, you need to think about crafting a custom tool for managing transactions and client data. A good CRM system is an organized customer database, helping keep clients – and their preferred payment and contact details – in one place.
- Implement security features. One thing to keep in mind is that when you create your payment gateway, you’re responsible for all cardholder data. As such, it’s extremely important to implement tools like tokenization that keep credit card data separate from your online store’s server. Tokenization replaces credit card numbers with anonymous tokens. You’ll also need to follow all PCI DSS standards if you’re handling credit cards.
- Obtain required certifications. Apart from PCI auditing, you must apply for a 3DS certification from EMV (Europay, Mastercard, Visa). This international certification is required to process customer bank cards containing a chip.
Pros and cons of creating a custom payment gateway
Is creating a payment gateway right for you? There are multiple pros and cons to consider.
Create payment gateway pros:
- Lower monthly and per-transaction fees over time
- Full control over payment processing
- The ability to create your custom features
- You can sell your payment gateway services to other companies for additional revenue.
Create payment gateway cons:
- Considerable set-up costs, including all required certifications, developer fees, and audits
- Lengthy set-up time between development, UX testing, and ongoing maintenance
- Requires more workforce than an out-of-box solution
- Responsibility for security falls solely on your shoulders.
Create a payment gateway: alternative options
Whether you’re short on time, money, or qualified developers, it’s far easier to pay for a payment gateway like GoCardless than build your own. GoCardless provides a pull-based Direct Debit solution that doesn’t suffer from the high level of per-transaction fees and failure rates that card payments are subject to. It also offers an Instant Bank Pay service for same-day payments. This gives you instant payment confirmation for peace of mind. It saves money, too, being 54% cheaper on average than comparable online card transactions.
Also read: Exploring Local Payment Methods and Digital Finance in Algeria
TransFi can help
Transfi can assist you in creating your payment, which can help you automate payment collection and cut down on the amount of admin your team needs to deal with when chasing invoices.
FAQs
- What are the four types of payment gateways?
- A payment gateway is a service that securely processes credit and debit card transactions for online and in-store businesses. There are four main types of payment gateways: redirect, hosted, self-hosted, and API-hosted.
- What is a payment gateway explain with an example?
- A payment gateway is a service that enables businesses to securely accept online payments from customers. It acts as a bridge between the customer's payment information and the merchant's bank or payment processor, facilitating the transfer of funds
- Is Google Pay a payment gateway?
- No, Google Pay is not a traditional payment gateway. While it facilitates payments, it primarily acts as a service provider and a facilitator, allowing users to store and manage their payment details within their Google accounts.
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