Businesses interested in developing a payment gateway must have a proper payment processor and follow the necessary steps to accomplish their goal.
FREMONT, CA: Many organizations are interested in developing their payment getaways, such as merchants trying to decrease payment service fees, startups looking to provide a gateway in an underserved area, or online companies that started with a white-label service that delivers technical restrictions instead of assistance.
Several people underestimate the magnitude and scope of creating a payment gateway from scratch. Many people have misconceptions regarding the steps needed in setting up and administering a payment gateway.
Where to start?
While creating a payment gateway, companies may believe that they need to consult with developers or technological service providers. After all, it's a digital payment option that accepts credit cards.
This idea is incorrect; the first step is establishing business partnerships with a payment processor or an acquiring bank.
What is the importance of a payment processor?
The companies will need something to connect it to a payment gateway to provide it as a service. The payment processor falls in the category of this something. A payment processor moves the transaction through the payment network, often known as a merchant service. An acquiring bank can also act as a payment processor.
If the companies work with a processor, it will offer the business technical details on how to interface the gateway with their system. They may need to collaborate and integrate with several processors based on the payment methods they want to accept.
Why is an acquiring bank necessary?
The companies require a payment processor and an acquiring bank if they are a merchant who wants their payment gateway. To accept digital payments, merchants currently need a merchant account offered to them by acquiring banks.
A bank or financial institution (FI) that processes credit or debit card payments on behalf of a merchant is known as an acquiring partner. Due to chargebacks, refunds, ACH returns, and potential fraud, the acquiring bank companies choose will bear the risk for the business and will need specific financial commitments.
What technical specifications will be needed?
The criteria required to interface the payment gateway with the system and the overall payment network will be provided by the payment processor of the companies have selected. They may have to obtain additional specifications from other acquirers or processors if they wish to accept various payment types.
These technical parameters will help the companies to determine which technology they can (or should) employ to establish the payment.