January 29, 2021
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: Let the Dream Come True

Key Takeaways

  • Building a custom payment gateway requires careful consideration of merchant category codes, target countries, currencies, and understanding specific gateway needs for these merchants.
  • Establishing relationships with acquiring banks is crucial for authorization to provide merchant account services, ensuring compatibility with desired currencies and geographies.
  • Selecting a technical solution entails choosing a payment processor or gateway that aligns with your target merchant categories and can integrate with your acquirer.
  • Deciding between processor integration, in-house custom product, licensed open-source-code solution, or a white label product depends on your investment capability and desired level of control and responsibility in the payment gateway process.

Building or licensing your own payment gateway involves many important aspects, both business and technical. The two conceptual options are as follows. Option one is to try to build a custom payment gateway from scratch. Option two is to license an off-the shelf solution and try to customize it according to your needs. In either case, before actually accepting digital payments you need to establish some critical relationships and build the technological solution. Let us take a quick look at the major components of implementing a payment gateway of your own.

Ten pieces of the puzzle called “your own payment gateway”

1. MCC codes

What are your target merchant categories? Which specific gateway features will they need the most? If you don’t have the answers, this is the right time to clarify these issues.

2. Currencies and geographies

Which are your target countries and currencies? Is the settlement currency the same as authorization currency? Are you ready to pay more for cross-border transaction processing? Who are your prospective partners in each country?  

3. Acquiring bank partnerships

Are you authorized to provide merchant account services? If not, then it’s time to find a partner (presumably, an acquiring bank) that will onboard and underwrite your merchants. It should also support the currencies and geographies you need. Besides, your gateway partner might be able to connect you with an acquirer through some existing integration or partnership. To learn more on the subject, check out our article on the impoprtance of acquiring partnerships.

4. Technical solution

The payment technology you utilize through a processor or gateway should meet all your needs. Particularly, it should support your target merchant categories and be ready to partner with your acquirer(s).

5. Integration details

Get the specifications from the acquirer’s representatives ASAP. Thus, you will make the integration process more transparent and less costly. As the classic said, “make haste, the better foot before”.

6. Integration organization

Give integration specifications to your gateway provider. If you are building a custom solution in-house, give them to your development team.

7. Limits

Clarify technical details, time limits, and costs with personnel, that will be involved in your gateway service.

8. Merchant management and partnerships

What is your integration strategy for your merchants and partners? How you are going to migrate the merchants from your portfolio to the new platform? Clarify these issues before moving forward.

9. Contracts

Work through the details of your agreements with the acquirer, payment gateway vendor, and PCI auditors. Follow all the provisions of these agreements.

10. PCI compliance

What is your PCI compliance status? Do you need to go through PCI audit? PCI assessor would have the best answers to these questions.

Your own payment gateway implementation: 4 technical options

Partnerships and agreements concern the business aspect of the process, but technical aspects are no less important. So, be careful to choose the particular “flavor” of your own payment gateway solution that best suits your business model. Your options will depend on the amounts you are ready to invest and on the features your gateway has to support.

1) Processor integration. Partnering with “the one and only” acquirer often entails partnering with a single processor. Or vice versa. Thus, if you don’t mind using the platform of their choice (potentially, a legacy one), you can choose this option.

2) Custom product built in-house. A payment gateway product you build from scratch provides the highest degree of control over the process. It also eliminates the need to pay gateway fees. But can you afford the effort? And are you ready to dedicate 12 to 18 months of your time to the project? If the answer is positive, go for it.

3) Licensed open-source-code solution. A licensable payment gateway product with open source code is a mixture of custom and off-the-shelf solutions. If you have a strong development team, but terminal and financial limitations do not allow you to build a gateway from scratch, this option is for you. Moreover, usually, there is an option to delegate customization process to the gateway vendor’s team.

4) White label payment gateway product. Startups with small processing volumes and basic needs, usually, go for this option. It does not give you much of control and responsibility. However, it is, definitely, an image booster. Still having doubts as to whether to start your own payment gateway or not? Take a quick quiz . It should help you estimate your chances.

To summarize

After you answer all the listed questions, you are in position to start building your own payment gateway product. Electronic payments world in general and payment processing for internet businesses in particular are a lucrative field for activity. If you have limited resources at your disposal, a hosted or licensed white label solution might be the best option for you.

Feel free to consult our payment experts, request a UniPay Gateway demo, and take a look at the source code. We will help your dream of your own payment gateway come true.

Useful articles to help you: