How to start a processing business without development costs

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In this article, we will look at how to become a payment service provider (PSP) without development costs and how to save up to 50% on processing costs with the right software.

If you are looking for opportunities to join the payments industry, there seems to be no better solution than starting your own processing company. However, the truth is that the level of competition and bureaucratic delays make this industry unattractive and often even hostile to newcomers.

Why it is worth doing payment processing​

Because today, payments are more attractive than ever.

This is true. People are turning away from cash, enjoying the opportunity to pay with a single stroke of their credit card. As a result, in 2015, shoppers spent $ 178 trillion in non-cash transactions.

Since then, the numbers have skyrocketed thanks to the emergence of contactless payment methods. It is predicted that by 2022, about 33% of American shoppers will choose an e-wallet over any other payment method, while 27% will choose to pay by credit card.

MerchantSavvy reports that the mobile payments market will reach $ 3.08 trillion by the end of 2024. Already, 84% of Europeans use mobile payments on a regular basis.

All of this proves that now is the time to enter the market. But by no means forgetting about the tough competition that reigns in the industry. And before we move on to a detailed description of the various ways to open your own processing company, I would like to especially emphasize the importance of a deep understanding of the industry and having a team of experts to start.

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How to open your own processing company​

There are several ways: build your own payment gateway, resort to a boxed solution, or use a white-label payment system . We'll look at each of these options below to help you make an informed decision.

What does a “boxed solution” mean?​

This decision is rarely heard in narrow circles, since for a number of reasons, payment service providers rarely use it.

A boxed solution means software purchased by the purchaser under full ownership. The company becomes the owner of this solution and can independently (or resorting to the help of specialized specialists) modify it for its business tasks, provided that the author of the product allows changes in the program.

The advantages of a boxed solution:

• One-time payment.
  The client pays for a boxed solution once, excluding system maintenance, technical support, etc.
• The server with the software product is located on the client's server.
  Thanks to this approach, it seems that all the data that is stored on it is protected. Moreover, the owner can use any security solutions to protect data within the system.

Now let's take a look at the disadvantages of the product.

Disadvantages of a boxed solution:

• High price.
  The product is known for its extremely high cost. Accordingly, if the company is at the startup stage, the threshold for entering the business increases.
• Own server.
  To deploy the program, you need to purchase your own server.
• Long startup.
  It may take several months for the system to start up and configure. This means a delayed market entry and, as a result, losses.
• Several Internet lines.
  For the uninterrupted operation of the program, and therefore of the entire service, two separate Internet lines to the office and a backup power supply are required.
• System Administrator.
  Content on the staff of the system administrator for software maintenance. Every month you need to pay wages from 3.500 USD, accrue vacation and sick leave.
• Technical support.
  Finally, technical support and updates will come at an additional cost. Do not forget that after system updates, unexpected errors may occur.

Other problems associated with choosing this product include the number of local payment solutions and limited functionality. Making changes to the platform and adding connectors is vital to the success of your business. Therefore, before signing the contract, make sure that the software creator allows you to make changes to the program that are tailored to your needs.

Is it worth it or creating your own payment gateway?​

At first glance, creating a payment gateway seems like the fastest way to start your own processing company. But experience shows that this statement does not reflect the full picture.

Building a gateway from scratch is actually one of the more resource-intensive and time-consuming solutions.

You see, first you need to hire a development team. And not just developers, but experts with experience in the payment industry and a deep understanding of a range of technologies including:
• Backend - PHP / Java / .NET / Ruby
• Databases - MySQL, Elasticsearch / Logstash / Kibana
• Frontend - VueJs / Angular / React, JavaScript / TypeScript, Mercure CI / CD
• Fast development, QA, application deployment - Docker, Kubernetes
• QA - Behat / Cucumber, Gherkin

On average, a developer of this level will cost your company 3.500 USD per month. To create the program, you will need three developers, one DevOps specialist, and one information security specialist. Therefore, multiply 3.500 by five employees in the team - and you get 17.500 USD in monthly salary fund.

It takes 6 to 24 months to develop the system and further bring it in line with industry safety standards. Accordingly, your payment system will cost you from 105,000 to 420,000 USD.

The waste does not end there. Once the system is up and running, the development team will switch from direct development to supporting the program, introducing improvements to the gateway, fixing bugs, and developing new functionality.

Therefore, before deciding to write a program from scratch on your own, estimate the full cost of this project. An in-house payment system is an excellent solution for large corporations that can afford both the development and support of the system. At the same time, startups and small companies should pay attention to white-label software.

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White-label payment gateway​

You can also become a processor by reselling white-label software. With it, you get an easily customizable payment processing system that is easily branded for your company and fully adapts to the needs of your business.

Among the advantages of this solution:

1. No development costs.
   The biggest advantage of this solution is the absence of development costs. White-label payment software allows you to sell a turnkey solution at a reasonable cost. Together with it, you get an easily customized platform, many ready-made connectors and constant system support.
2. Lots of payment methods.
   Along with the growth of consumer expectations, the list of available connectors in the white-label system is also growing, as developers strive to reach the widest possible audience of users. And you will have access to them immediately, from day one.
3. Full customization.
   The system development team will always be available in case you need help in customizing the gateway. But the main thing: the system is configured in such a way that you can independently make changes to it without the need to contact support.
4. Increased throughput of payments.
   Platforms with smart routing and cascading of declined payments in their functionality will help you significantly increase the number of approved payments.
5. Consolidated data.
   Instead of reconciling transaction data from different payment channels across different payment platforms, you can consolidate all transactions in one convenient system. This way, you save a huge amount of time and effort for your employees, and also allow them to focus on their core responsibilities instead of the transactional routine.
6. Safety standards.
   Acquiring a security license requires a deep understanding of the issue and long hours of bureaucratic delays. But if you decide to use white-label software, all these tasks will completely fall on the shoulders of professionals.
7. Various ways of integration.
   At Akurateco, for example, we offer two different types of integration: deploying the program on our server or on the client's own servers (“on-premise”). It helps users to do business according to their jurisdiction.

Now let's look at how you can start your own processing company without development costs today.

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How to start a processing business without development costs​

The whole process can be boiled down to four simple steps.

1. Find a trusted white-label payment software provider.
   Read reviews, ask around from colleagues in the industry, take a look at forums relevant to your industry. Don't focus only on the giants of the industry: they are often more buzzing around, while smaller providers can offer the same level of service with more flexibility for less cost.
2. Request a demo of the system.
   At Akurateco we offer a free demo of our white-label payment software. Our goal is to provide a potential buyer with a clear understanding of the key functions of the platform and give them the opportunity to ask their questions before making a final decision.
3. Agree on the terms.
   Agree with the provider on the number of connectors, target countries, sales volumes, tariffs and functionality. Sign the contract, pay the invoice - and finally ...
4. Integrate software.
   This is the final stage. Once the platform is launched, you can start selling your services and processing merchant transactions.

Last thing​

Here are detailed instructions on how to start your own processing business. If you are currently considering different possibilities of becoming a processor, let me offer you a free demo of our system, Akurateco. During the demo, we will demonstrate the key functions of the program, introduce you to its interface, and also answer all your questions.