In the two previous articles, we analyzed the business model of the payment business and payment tools that a company can offer their online merchants to accept. Today, let’s talk about the processing system (aka the processing platform, or payment gateway software) which is the technical core of the payment service provider.
This article willnot describe the possibilities that a processing system should have to satisfy your online merchants (customers). These call for individual articles (some of which have already been published in the blog, but most are still being prepared). Today we will focus on the main characteristics of the processing system that are more important for you as a payment service provider, rather than for the online merchants of your payment company.
What should I pay attention to when choosing a processing system?
- Your processing system should be able to work with selected payment means and correspond to the chosen business model.
For example, the processing platform of the payment aggregator should be able to calculate the amounts payable to each online merchant automatically.
- Scalability of the processing system.
Scalability is the ability of the system to increase productivity. For a beginner processing company (if it’s small, with one minor client), it is normal to process just a couple of transactions per minute.
But as the business grows, the transaction flow may well reach over 10 or 20 transactions per second. If the processing system of the payment service provider hits its performance “ceiling”, which cannot be increased due to the features and architecture of the processing system itself, moving to a more advanced version of the competitor’s processing platform will be a pain in the neck.
To avoid this, it is better to choose the right software from the very beginning. For example, our platform beGateway, which we offer for rent, now supports 200 transactions per second or 535 680 000 transactions per month. However, a beGateway leaseholder asked to increase the flow to 1000 transactions per second or 2 678 400 000 transactions per month. One must admit this is quite impressive. And we haven’t hit the ceiling yet.
- Extensibility of the processing system
Extensibility of the processing system is the ability to add new functions, payment tools, etc. The processing system should be able to adapt quickly in modern conditions: to facilitate new payment means integration, to add reporting forms or service modules for online merchants, etc.
At the very beginning, it is important to choose a processing system to which you can add any functionality you might need quite quickly and easily.
- Processing system uptime
If you have a large business, you need to have your processing system online 99.999% of the time. Such a high percentage can be provided by 24/7 technical support and DevOps engineers who would manage the processing system and ensure its stability.
Where can I get the processing system?
- Develop one yourself?
Do not be tempted to start developing your own payment gateway software from scratch. This is costly, time-consuming and inefficient in modern conditions. More so, if you already know your potential customers and your business should be launched within a month. The salary of highly qualified programmers and other administrative costs will whistle from your pocket until the processing system is created, launched and the processing company starts earning money by providing payment acceptance services.
And even after the launch one can’t do without programmers and technical staff, because the processing system and the servers on which it will work need maintaining, updating and developing. Add to these expenses the cost, time and effort required for compulsory annual PCI DSS certification of the processing system, and it becomes clear why we do not recommend payment companies to create their own platform for Internet payments acceptance and processing.
- Outsource the development to a professional company?
To outsource the payment gateway development from scratch to professional companies whose business is software for e-commerce, is, in fact, to develop a processing system on your own, only the costs will be significantly higher, since the cost of the project will include not only the salaries of the programmers, but also the profit of the developer company you hired.
- Buy a ready-made payment gateway?
To buy a ready-made processing platform for your business is a good idea if you have a six-figure amount in euro allocated in advance for the purchase of the processing system software and its modification to meet your specific needs.
When choosing a supplier of the processing system, be sure to pay attention not only to the sales terms, but also to the terms of after-sales service. It is useful and important to know in advance:
- How much can it cost to add new functionality to the existing processing system?
- How soon can the supplier of the processing system implement new functionality?
- How quickly does the supplier undertake to respond and develop software updates in case of a critical vulnerability in the code of the processing platform?
- Last but not least, what will be the total cost of the preparation of the processing system for operation?
The software installation on your server may be included in the cost of the processing system. But the integration with your acquiring banks and other payment partners is, as a rule, negotiated separately.
It is important that the supplier of the software should perform all technical work related to the preparation, launch and further maintenance of your processing system. As a result, you will not have to hire a permanent staff of expensive technical specialists, which will mean allocating more money to the development of your business per se.
The idea of buying processing system software into acquisition is definitely good, as we have already noted. It saves time, but it still means significant financial costs immediately, which can be too burdensome for a beginning payment company. In addition, having a processing system and placing it on your own servers means that you have full access to all the payment information that passes through it and is stored in it. Which in its turn means that before starting to provide Internet payment services, your payment company must receive (and annually update) a certificate of compliance with the PCI DSS standard. If you sign an agreement with the supplier for technical support and maintenance, the supplier will be the one to undergo PCI DSS certification.
To rent a payment gateway?
Renting a processing system is perhaps the fastest, most effective, and least expensive way to start your business in providing services to online merchants.
We live in the age of cloud services. The concept of software as a service (SaaS) has proven effective for businesses. So why don’t you, the payment company, lease and use the processing platform as a service?
Renting a processing platform to provide online payments acceptance services is good for accomplished companies, but it is especially convenient for beginners. For a small part of the processing system software cost, the payment company gets the opportunity to use it. At the same time, the processing system itself is completely adapted to your needs: branding, customization, integration with your acquiring partners – all this is done by the supplier (more on the launch and preparation of the processing system).
We want to emphasize that if you lease the processing system, you will not have to go through the PCI DSS certification. This, as well as routine maintenance, updating and development of the processing system, will be taken care of by the lease provider.
Any business is a risk. For a beginning payment company not everything might go as it should. Not all companies manage to break even in the allotted time. Therefore, we recommend not to rush with the purchase of a processing platform, but to start a business to provide services to Internet sellers with leasing a platform. In the future, if necessary, the leased version of the payment system can be bought into acquisition. True, not all companies allow this, so ask about the acquisition in advance. In the case of beGateway, this is possible.