October 29, 2020
Written by
James Davis
Written by James Davis
Senior Technical Writer at United Thinkers

Author of the Paylosophy blog, a veteran writer, and a stock analyst with extensive knowledge and experience in the financial services industry that allows me to cover the latest payment industry news, developments, and insights. Read more

Reviewed by
Kathrine Pensatori
Product Specialist at United Thinkers

Product specialist with more than 10 years of experience in the Payment Processing Industry. I help payment facilitators and PSPs solve their various payment processing issues. Read more

Your Own Payment Gateway: to Build or not to Build?

Key Takeaways:

Modern payment gateway solutions serve two major purposes. First, they harmonize cardholder data formats as it is sent from merchants’ POS systems to payment processors. Second, they ensure security of payment data (provide an additional payment security layer). More and more present-day companies face the tough choice between buying ready-made gateway products and building their own gateway solutions from scratch. So, in the payment gateway services world Hamlet’s famous question can be re-formulated as: “To build or to buy?” And there is no uniform answer. Everything depends on specific company’s business case. The rule of thumb is as follows. Building your own payment gateway solution makes sense only if resulting savings offset gateway development and maintenance costs.

Let us re-iterate the advantages and disadvantages of developing your own gateway solution.

Advantages of Building Your Own Payment Gateway

  • Unlimited customizability potential. You are the boss of your gateway solution. You control the whole process and are free to add any features you or your customers need.
  • No gateway fees to pay. Probably, this is the key reason why companies are considering the prospect of developing their own gateway solutions. And the major savings aspect (besides indirect and opportunity costs).
  • White-labeling option. Many companies prefer to offer white label payment gateway services. So, if you offer your custom gateway product to other businesses as a white label payment solution, it becomes an additional revenue source.

Disadvantages of Building Your Own Payment Gateway

  • High development and maintenance costs. According to rough estimates, the cost of building a viable payment gateway product starts at the level of $150,000. At the same time, average gateway fees, usually, amount to 1% to 1.5% of transaction amounts. That is why, before starting your project, it makes sense to perform at least some rough reality check.
  • Integration and certification efforts. In order for your payment gateway to work properly, it has to be integrated with and certified by all your target processing partners. Moreover, every new feature you add to the product has to be separately certified. So, PCI certification and regular PCI audit of your gateway product is an additional burden and a significant cost item.
  • The need to harmonize reporting formats. Indeed, each processor sends transaction settlement reports in its own unique format, sometimes difficult to understand.
Payment Gateway Project Seems Complex?

What makes a competitive payment gateway solution?

There are many payment gateway products at the market. And new solutions are constantly developed. So, what is a merchant looking at when choosing a payment gateway solution? Well, here are some common features that a third-party or your own gateway product should have in order to be competitive.

  • Unified payment processing API (for all partners and payment types).
  • Integrations with multiple acquirers and processors.
  • Customizability potential. That is, the ability to accommodate new features when necessary. Examples of such features include support for new currencies and payment types (such as e-wallets, crypto etc).
  • Support for recurring billing. This feature also includes secure cardholder data storage.
  • Reliable fraud protection mechanisms and PCI compliance. This also concerns cardholder data flow management and data storage, as well as regulation of access to sensitive customer data.
  • Smooth management of chargeback and refunds.
  • Transparent reporting formats.
  • User-friendly payment experience (interface).
  • Responsive and proactive 24/7 customer support.

To Summarize

Building your own gateway is a labor-intensive and costly enterprise. A truly competitive payment gateway product should include a bunch of critical features and provide added value. Building a custom payment gateway solution from scratch is a plausible option for a large company that wants to control every step of the process. Smaller companies might find it more beneficial to use third-party or white label payment gateway solutions.

Some modern payment software companies (such as United Thinkers) are offering licensable off-the-shelf gateway products with open source code. These solutions are already integrated with and certified by multiple large acquirers and processors. Moreover, they provide almost unlimited potential for scalability and further customization.

Feel free to contact the experts at unipaygateway.com to learn more about the benefits of licensable custom payment gateway solutions.


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