A Comprehensive Guide to Create a Custom Payment Gateway

Payment Gateway Vs Payment Processor

A payment gateway is software that is used to connect a retailer’s website or app with the financial institution responsible for the transaction. Its motive is to safely deliver the customer’s payment information to the acquiring bank. The bank then further sends this information to the card issuer for authorization. The payment gateway responds to the merchant’s app or website on approval of the transaction and transmits the transaction data to the bank.

On the other hand, the payment processor is a financial institution that facilitates the transfer of funds electronically between merchants and customers. In other words, it facilitates the handling of technical aspects of transactions like routing the transactions to the card issuer for authorization and then passing the transaction information to the banking networks for settlement. It also handles the financial aspect of the transaction like depositing funds in the merchant account, performing chargebacks, and so on.

So a payment gateway is an advanced technology that connects the merchant, the customer, and the financial institution together whereas a payment processor is a financial institution that takes care of transactions and funds exchanges.

Top 5 Benefits of Developing a Custom Payment Gateway

Although there are many ready-made options available in the market, none of them can offer you the freedom and control over the payment process as a custom getaway can.

Apart from this, even if we go with the current market scenario, according to a recent survey, the market size of the global payment gateway in 2022 was around 26.79 billion USD. This value is further expected to grow at a rate of 22.2% from 2023 to 2030. This means the future of a custom payment gateway is bright. 

To get a better understanding, let’s go through some advantages of having your own custom payment gateway.

• Fewer Fees: With ready-made solutions, you are sentenced to lifely fees for using services. Apart from this, you are also liable to pay the registration fees. But with custom payment gateways, things are different. You will be your own boss and free from operation fees no matter how many transactions you make.
• Custom Features: It doesn’t matter which ready-made global payment processor you go with, none is going to meet your requirements. There can be payment methods that do not support multi-currency transactions, some can lack the feature of working with recurring charges, some can be too expensive to use on a regular basis, and so on. But going with custom payment gateways will fulfill most of your business requirements.
• Additional Revenue: Having a custom payment gateway will turn you into a provider. It means you can charge registration and transaction fees from other merchants for offering your services. You can also add more features like advertisements, in order to earn a secondary income.
• More Scope of Payment Gateway Integrations: Custom API provides you with an option to integrate your payment gateway with desktop, mobile, web apps, smart vending machines, wearable devices, digital kiosks, and so on. A robust API will let you integrate your gateway to multiple mediums without any limits. This will provide you with a single-pane view of your payment operations.
• Enhanced Security: Although data breaches are not common in payment gateways as most companies invest heavily in security. Still, if you are looking for enhanced security to prevent yourself from payment frauds like Formjacking (a form of Megacart attack) you can go with customized solutions.

7 Must-have Features of a Custom Payment Gateway

Needless to say, the features are going to play a major role in the overall development cost. So it is essential to go with only selected features as per your business need or the ones you want to offer your users. But yes, there are some must-have features that can’t be avoided to get or give a rich experience. Some of them are

• Recurring Payments: This feature enables merchants to pull funds from customers’ accounts automatically for ongoing services. One can easily configure it via dashboards, virtual terminal commands, or APIs. This is the best solution for subscription-based service providers that demand payments at regular intervals based on the monthly or yearly plan. The recurrent payments take place automatically once the customer agrees to be charged after entering their card details.
• Fraud Protection: When it comes to online payments, the risk of card-not-present fraud along with other misuses is common. So you are required to go with the best data protection and security practices not only to prevent yourself from getting scammed but also to ensure the safety and trust of your users.
• Tokenization: It involves replacing sensitive data with some random alphanumeric tokens to prevent attackers from compromising data security. The sensitive data still needs to be stored at some centralized location for subsequent reference.
• Easy Integrations: This feature will allow you to seamlessly integrate with multiple payment processors.  As a result, you will be able to offer different options to your end users. Apart from this, easy integration with a CRM system and popular business software tools is something you must opt for.
• Virtual Terminal: This feature will allow you or other merchants to accept payments with a credit card without its physical presence. This means a buyer will be able to pay via a mobile device instead of an online credit card payment system.
• Hosted Payment Gateways: A third-party checkout system to redirect buyers to the payment service provider’s (PSP) page. A user will be sent back to the website’s checkout upon completing the payment. This enhances security.
• Disputes & Arbitration: Users must be able to handle disputes from banks without any hassle. This feature will not only solidify trust but will also ensure a competitive edge over your market competitors.

7 Steps to Create a Custom Payment Gateway From Scratch

Although a payment gateway creation process varies from business to business as per the need of the hour, still the steps remain the same. So let’s go through some common steps.

Step 1: Ideation & Research

It is essential to have a solid idea. After an idea, you are required to hash out the plan with experts in order to determine the feasibility or changes if any. Once it is done, go for extensive market research. Study your competitors, market trends, potential audience, and so on to get a better idea of what the current market needs are. This will help you build a competitive financial payment system.

Step 2: Designing

Once you are done finalizing your requirements, you can pass them on to the designers. UI/UX and graphics designers will help you design your product’s interface and brand identity. They will also build a working prototype to use as proof of concept.

Step 3: Development

After a  feasible design, developers will start playing their roles where they will collect the material design elements from prototypes and use them to code the payment gateway. Developers can also integrate 3rd-party APIs depending on specific business requirements.

Whether it’s frontend or backend, both will be handled efficiently to create a robust and scalable system infrastructure.

Step 4: Quality Assurance

Bugs and errors can destroy the user experience. In order to tackle them, quality testing will be carried out where QA specialists will test the software rigorously to ensure smooth functioning even in heavy traffic. Once the testing is completed a detailed report will be generated to improve the quality of the app. 

Step 5: Optimization

If the bugs and errors are found to be critical, the software will be handled back to the development team to fix the issues. Once they are fixed, the QA testers will again test it rigorously.

Step 6: Launching

Once the product is approved by the QA testers, it will be launched. You can also launch the beta version depending on the timeline. This will help you with valuable user feedback. On the other hand, you can also sell product services to clients or financial institutions as a white-label software solution.

Step 7: Support & Maintenance

The development process is not completed after the successful launch of a custom payment gateway. The software demands a team of live support agents to address the queries of your users.  Apart from this, there is a need for developers to update and maintain the platform on a regular basis to provide you with an edge over your market competitors.

Also Read: How Much It Will Cost to Make a Mobile Payment App Like PayPal?

Hire Apptunix as Your Custom Payment Gateway Development Company

Custom Payment Gateway Software is one of the biggest opportunities to control your business operations without relying on third-party apps. It will also enable you to enter the rapidly growing market segment. So if you are planning to make a custom payment gateway Apptunix can help you in your endeavor. Apptunix holds extensive experience in the field of custom payment gateway development. It has served both local as well as global clients with white-label payment app development services.

Bonus Read: Determine Cost Estimation for Digital Payment App like Google Pay