Many people want to set up an omni-channel payment gateway solution, yet many don’t realize how difficult it can be to build one from the ground up. If you are interested in your own omnichannel payment gateway solution, then this article is definitely a worthwhile read.
Further on, we offer a simplified version of the requirements you will face when setting up the solution.
PCI Compliance
According to PCI DSS, as a company dealing with credit card transactions, you are obligated to follow certain requirements. Some of the requirements from the latest PCI compliance standard are listed below.
- Protect cardholder data (CHD) cryptographically and use PCI DSS-compliant data centers.
- Access authentication and user identification have to be strictly monitored.
- Physical access to cardholder data should be restricted.
- Security systems should be regularly tested.
- Proper security measures should be implemented.
Partnerships
An acquiring bank partnership is a critically important partnership to develop.
Some merchants believe that all they need for electronic payments is a payment gateway. However, this couldn’t be further from the case. Acquiring banks is the way to enter the international scene in banking. Furthermore, they can also assume the liability for your operations.
The integration process itself can vary based on the specific requirements set forth by the acquiring bank. During and prior to this process, it is important to settle on making sure the acquiring bank is capable of supporting the features you desire.
Selecting the appropriate acquiring bank is crucial to the success of the payment gateway.
Certifications
Depending on what features you may want to add, there may be other certifications you have to go through. More specifically, extra certification is required from including more payment methods into your payment gateway.
It is important to be familiar with the certification process and procedures required since each certification comes with its own cost.
Keep in mind that certifications also take an uncertain amount of time. By being familiar with the procedures and legal requirements, you will be able to properly budget and time the certification process.
Omni-channel Payment Gateway Features
The market is full of gateways with various amounts and scopes of features. While it is useful to have many features at your disposal, it is also useful to keep in mind that you may be overpaying for features that you do not actually need.
The payment gateway features should strongly conform to your type of business and its operations. Below is a list of some of the most common crucial features that are usually expected.
Card-Not-Present Payments
Rudimentary online payments may be all you need if you simply sell through a website. You may also additionally need some form of credit card data storage. Other useful features are:
- payment processing API
- plugins for services
- credit card tokenization
- hosted payment pages
- 3D Secure support
- fraud monitoring tools
- chargeback and refund manager
Card-Present Payments
If your business is dealing with retail in some capacity, then it is expected that your business can deal with card-present transactions.
If you are also dealing with merchants working with retail, your business will also have to include the necessary features, primarily the implementation of an EMV payment terminal solution.
Batch File Processing
Businesses with recurring payments, such as insurance companies or fitness clubs, can greatly benefit from batch file processing. Subscription-based companies will also need CNP functionality in addition to batch file processing.
Hosted Recurring Billing
This feature is useful to entities with a system of recurring bills. This more specifically pertains to businesses with a billing component in their records system which utilizes a third party to manage the bills and subscriptions.
Sub-merchant Management
Large SaaS and PayFac platforms, as well as PSPs, greatly benefit from this feature. If your business is one of or similar to these types, then the gateway solution should be more supportive of the merchant lifecycle.
Implementing Omni-channel Gateways
Depending on your resources, undertaking the implementation of omnichannel gateways can be done separately through a third party or internally.
Nevertheless, each choice comes with a balance of resources and effort to spend, as well as a certain degree of control and liability needed for maintenance. Some viable options are explored further below.
Building A Custom Payment Gateway from Scratch
Larger companies are generally more suited to building their own custom solutions from the ground up due to the available resources at their disposal. This allows free reign over the development of the gateway, including the features and implementation processes.
This is also a simple way to avoid gateway fees.
Licensing an Open Source Payment Gateway Solution
Instead of going through the arduous process of constructing an entire payment gateway from scratch, licensing a payment gateway solution can relegate some of the responsibility to the provider.
The license provider takes care of hosting the payment gateway and making sure it remains compliant with the necessary legislation. Furthermore, the licensed product can be further customized to better suit whatever needs may arise.
White-Label Payment Gateway Solutions
Out of all the options available, white-label payment gateway solutions are among the cheapest on the market.
This option goes further than the open-source solution by outsourcing the infrastructure and development of the gateway to a third party. The main downside to this is the lack of control your business has over the payment gateway itself.
Payment Facilitator Model
Payment facilitators, or PayFacs, are essentially a business offering a service to a portfolio of sub-merchants.
The main appeal of PayFacs is its capabilities, including merchant underwriting, onboarding, sub-merchant funding, and payment reconciliation. These make a white-label PayFac gateway excel in supporting the sub-merchant life cycle.
Payment-as-a-Service
While the PayFac model has its advantages, this model proves to be problematic for businesses seeking to profit from payment services. This is where the Payment-as-a-Service (PaaS) model comes into play.
In contrast to PayFacs, the PaaS model has the company outsource the infrastructure, development, and operations to a third party. PaaS and even white-label PayFacs are usually part of an even bigger PayFac or PSP.