Every online store or mobile app that accepts payments online requires a reliable intermediary to process transactions. The need of [choosing the right payment gateway] creates a great opportunity for entrepreneurs who want to enter the Fintech market and create their own company.
Starting such a business is a complex but promising process. In this article, we will look at the basic steps to create a payment gateway provider company.
How to become a payment gateway service provider?
Becoming a payment gateway service provider is a complex process that requires careful training in the legal, technical, and financial fields.
1. Analysis of the market, target audience, and competitors
First, you need to analyze the market in order to understand the needs of businesses and the competitive environment. It is important to identify your target audience and develop a business model that takes into account revenue sources such as transaction fees or subscriptions. You can explore payment providers as your competitors via PayAtlas.
2. Legal issues
First, you need to register the company in the appropriate jurisdiction, taking into account the requirements of local legislation. Don't forget to get the necessary licenses depending on the country or region of your business.
Your company must meet an international standard if you work abroad. Therefore, consider anti-money laundering (AML) requirements and customer identification (KYC) procedures. This includes developing policies and tools that will allow you to verify the identity of customers and track suspicious transactions. With such solutions, you are not only protected by law, but also have the trust of customers.
Prepare all the necessary legal documents - client agreements, privacy policies, and Terms of use of the platform. These documents must be clear, transparent and comply with legal norms.
In the United States, launching a payment gateway involves registering a company at the federal level and in the state where you will work. In addition, you must register as Money Services Business (MSB) with the U.S. Treasury Department through Fin CEN (Financial Crimes Enforcement Network). This registration is mandatory for all companies that process financial transactions. Additionally, each state may have its own requirements. For example, California requires a separate money Transmitter License issued by the local DFPI.
3. Technological infrastructure
Foremost, you need to create a flexible and functional platform that has an API for easy integration with various e-commerce platforms, such as Shopify, WooCommerce, or Magento. This allows businesses to quickly and seamlessly implement your payment gateway in their online stores or mobile apps, ensuring that the service is widely available.
One of the main requirements for the platform is to support various payment methods:
- bank cards;
- e-wallets;
- bank transfers;
- cryptocurrency.
It is advantageous for you to have a wide range of payment methods. Because buyers prefer different methods, and you will give them the right to choose. Be sure to take into account the specifics of different markets: in some countries, certain payment systems or local e-wallets dominate.
Special attention should be paid to PCI DSS certification. We talk about this in every article, because it's really important!
In addition, the payment gateway must be able to withstand large amounts of traffic and transactions, especially during sales or holidays. This requires a scalable gateway architecture that allows you to quickly increase server throughput and ensure fast transaction processing without delays. So test and test the platform so that you don't have to deal with problems and angry customers later.
For example, in the United States, payment gateways must meet high standards of security and integration capabilities. American consumers are used to fast and convenient payment methods such as Apple Pay, Google Pay, Venmo, or PayPal. When creating a platform that processes payments in the United States, it is important to integrate these popular systems. In addition, gateways must support local data security requirements, such as compliance with the California Consumer Privacy Act (CCPA), if the company operates in the state of California.
4. Partnerships
First, you need to make deals with global payment systems such as Visa and Mastercard. This allows you to accept card payments, which is a basic need for most businesses. During the negotiation process, it is essential to agree on the terms of cooperation, including the amount of fees charged for each transaction.
It is also influential to build partnerships with acquiring banks that are responsible for the payment processing. Banks also provide money Storage, Account Management, and refund or chargebacks processing.
The financial infrastructure must be reliable and well-organized. One of the key aspects is to create a reserve fund to cover risks such as chargebacks, fraudulent transactions, or temporary payment delays. The presence of a reserve fund helps to guarantee the stability of the company's work and prevent possible failures in settlements with customers.
For example, in the United States, a company that launches a payment gateway must work with leading acquiring banks, such as Chase or Bank of America. In addition, to integrate with Visa and Mastercard in the United States, companies often partner with payment processors such as Stripe or First Data, which provide reliable technical communication with global payment networks.
Also in the US, it is important to take into account local financial regulations, in particular the EFTA and the CFPB (Consumer Financial Protection Bureau) rules, which require transparency of settlement conditions and protection of client funds. Meeting these requirements and having a reliable financial infrastructure helps gateway stay competitive and provide a high level of customer service.
5. Marketing
To attract customers, you need to develop an informative website about [setting up a merchant account], favorable terms of cooperation, and partner programs with e-commerce platforms. It is equally significant to provide high-quality customer support and respond quickly to technical or financial problems.
At the development stage, it is necessary to expand the range of services, add new payment methods, such as cryptocurrencies or BNPL, introduce innovative solutions and, if possible, enter international markets.
How to create a payment gateway?
Understanding payment gateways and building it is a challenge that requires deep knowledge, a strategic approach, and a significant investment of time and resources.
The world of financial technology offers limitless opportunities, and your company can become a significant part of this ecosystem. If you are willing to work hard, take on challenges, and innovate, creating your own payment gateway can be not only a lucrative business, but also a contribution to the future of the global economy.
