Thinking about setting up an online payment solution form for your business? To achieve this task you may be choosing between third-party solutions or developing your own in-house product. Each selection has its own set of pros, cons, and expenses that you’ll want to deal with as you settle the right solution. Here’s what you need to know about adopt the best solution for your business, setting up an online payment solution, and then optimizing it to make pleasant customers experience.
What is a payment gateway?
A payment gateway is a complex system that enables debit/credit card payments for online and offline businesses. It sets an uninterrupted passage of such transactions by encryption of sensible data and transferring them between a customer, an online shop, and a bank. The shop acts as a payment gateway and the bank as a payment processor. Hence, the payment gateway establishes communication between the three participants of the payment process. It safeguards every transaction runs safely by applying various anti-fraud tools and acting under the PCI-compliance.
From the tech perspective, the payment gateway is a layer above the payment processor. It receives data from the user and, redirects the payment to the processor in an understandable format.
Payment gateway vs. payment provider
It is crucial to outline the difference between the payment gateway and the payment provider. While the first is software, the second is the capacity to use this software for its intended function.
So, writing a working program doesn’t mean you can embed it into your eCommerce or commercialize it to other merchants immediately. First, you need to go through the certification process and connect with a payment processor. Note, building software is not a challenging assignment. In contrast, the registration procedure may take months or even years. Only after obtaining all the necessary approvals can you act as a provider.
How to become a payment service provider
So here are 6 steps you should do to become a payment service provider:
Step 1. Set up infrastructure
Step 2. Integrate with a payment processor
Step 3. Develop CRM
Step 4. Implement tokenization
Step 5. Get 3DS certificate from EMVCo
Step 6. Apply for PCI
And remember, Integrate with many processors. The more payment processors you link with, the more opportunities you give to your merchants. Specifically, the sellers will be able to choose among different acquiring banks to open an operating account. Also, they will have a choice of transaction fee rates.
You can draw inspiration from some successful European Payment Service Providers.