How to Create a Payment Gateway

If you’re the type of business owner who likes to take full control over operations, you might consider building your own payment gateway from scratch. This offers the highest level of customisation, but it’s also important to remain realistic about the challenges involved. Here’s how to create a payment gateway for your website, as well as a few tips to keep in mind along the way.

What is a payment gateway?

Before you decide to create your own payment gateway, it’s helpful to outline its intended function. A payment gateway is the system that allows your website to collect credit and debit card payments. It serves as the go-between for the customer, business, and payment processor. This entails providing a payment portal or checkout page for customers to submit their payment details, encrypting this sensitive data and passing it on to the payment processor or bank. When you create your own payment gateway, you must keep these functions in mind and ensure it’s compliant with PCI requirements and the latest anti-fraud legislation.

So, which types of businesses might be most interested in learning how to create payment gateways? Typically, it will be larger businesses who don’t want to depend on a third party, or those who are experiencing rapid growth and need a tailored solution to match their unique needs.

How to create a payment gateway

The specific steps to create a payment gateway will depend on your business needs, but most businesses will use a process like the following.

1. Create your payment gateway infrastructure. You’ll need a server to host your gateway, whether it’s your own or via a third party. If you’re using your own server, you’ll need to think about auditing and maintenance for any associated data centres.

2. Choose a payment processor. A payment gateway works hand in hand with a processor to complete online transactions. This could be a financial institution, a card network, or an independent processor. In any case, you’ll need to ask for the processor’s API documentation and follow implementation instructions. You’ll also need to develop an external API that will facilitate the transfer of client payment data.

3. Create a customer relationship management (CRM) system. With the nuts and bolts of payment processing in place, you need to think about crafting a custom tool for managing transactions and client data. A good CRM system is an organised customer database, helping keep clients – and their preferred payment and contact details – in one place.

4. Implement security features. One thing to keep in mind is that when you create your own payment gateway, you’re responsible for all cardholder data. As such, it’s extremely important to implement tools like tokenisation that keep credit card data separate from your online store’s server. Tokenization replaces credit card numbers with anonymous tokens. You’ll also need to follow all PCI DSS standards if you’re handling credit cards.

5. Obtain required certifications. Apart from PCI auditing, you must apply for a 3DS certification from EMV (Europay, Mastercard, Visa). This international certification is required to process customer bank cards containing a chip.

Pros and cons of creating a custom payment gateway

Is creating a payment gateway right for you? There are multiple pros and cons to consider.

Create payment gateway pros:

• Lower monthly and per-transaction fees over time

• Full control over payment processing

• The ability to create your own custom features

• You can sell your payment gateway services to other companies for additional revenue

Create payment gateway cons:

• Considerable set-up costs including all required certifications, developer fees, and audits

• Lengthy set-up time between development UX testing, and ongoing maintenance

• Requires more manpower than an out-of-box solution

• Responsibility for security falls solely on your shoulders

Create a payment gateway: alternative options

Whether you’re short on time, money, or qualified developers, it’s far easier to pay for a payment gateway like GoCardless than build your own. GoCardless provides a pull-based Direct Debit solution that doesn’t suffer from the high level of per-transaction fees and failure rates that card payments are subject to. It also offers an Instant Bank Pay service for same-day payments. This gives you instant payment confirmation for peace of mind. It saves money, too, being 54% cheaper on average than comparable online card transactions.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.