If you’re the type of business owner who prefers complete control over operations, you might want to consider constructing your own payment gateway from the ground up. This provides the most customization, but it’s also necessary to be honest about the challenges involved. Here’s how to make a payment gateway for your website, as well as some helpful hints along the route.

Before you decide to create your own payment gateway, it’s helpful to outline its intended function. A payment gateway is a 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 that 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.

Every day more and more business processes are moving online. An online payment form allows your customers to easily make purchases or pay invoices online, on any device, at any time. These forms are typically more limited than a full-scale shopping cart on a website, but are robust enough for one-time or ongoing service payments from customers.

A payment form is the most convenient method of payment today, increasing the likelihood that you’ll get paid. Beyond this, it’s also a great way to collect important customer information at the time of payment, such as email addresses and telephone numbers. A great payment form even allows you to safely store credit card information on file for customers who make recurring payments.

Payment forms are beneficial for any business, regardless of size. 

If you own a small business selling handmade products on commission, but don’t have a storefront, a payment form will be an essential element for your website. For larger organizations, it’s critical. You’ll need a solid website payment system that is user-friendly, fast, and convenient.

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.

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 organized 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 tokenization 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.

How Will You Accept Payments From Your Customers?

While the process of setting up credit card processing for small businesses may seem challenging, it’s much easier than it sounds.

Credit card usage rose an impressive 15% between 2020 to 2021 and in 2022, roughly 83% of American consumers had a credit card — this percentage continues to increase. Thus, proving that credit card processing has become an essential component of running a small business.

Small businesses that aren’t capitalizing on credit card sales are missing a huge financial opportunity. With the majority of modern consumers using credit cards, your company would be wise to have systems in place to accommodate the high volume of credit card transactions.

Read Also: What Are The Legal Constraints on Pay Systems?

To set up online payment processors for small businesses, you’ll need to evaluate the many credit card processing services available and choose the best solution for your business.

Researching the many credit card brands on the market is crucial for your small business and its customers since each credit card brand has its own rates and fees which can add up and be costly. As a business owner, you have the choice of which credit card brands you want to accept which is why understanding all the credit card brands out there and knowing which rates you can comfortably afford is crucial.

Visa and Mastercard are standard credit card brands for businesses to accept across all industries but it’s a bonus if you also accept American Express and Discover. The more options you offer to your customers, the happier they’ll be.

While American Express payments account for a smaller amount of the total payment pool when compared to other cards, AMEX transactions are 40 percent larger than other brands. Businesses are reluctant to offer American Express and Discover to their customers because those brands charge higher transactional fees than Visa and Mastercard. So, choosing to offer American Express or Discover for your customers relies on whether or not you want to take on the fees associated with these brands.

Before setting up credit card processing, your business should decide which methods it will utilize to accept credit card payments.

Will you be accepting payments in-person or online? Will you allow Apple Pay? Questions like these are important to ask before setting up a credit card processor, as they can help your company identify the necessary systems it needs to accept and process credit cards.

For example, suppose you’re primarily an eCommerce business. In that case, you won’t need to invest in a physical credit card terminal since a credit card reader is only necessary for in-person transactions. By performing these transactions online, your small business won’t be required to purchase a credit card machine and as a result, can save money. Therefore, online businesses should find payment processors that integrate directly into their eCommerce shopping carts to allow them to accept payments on their websites.

Whether you want to accept credit cards in-person or solely online, depends on your business model and your customer base. Luckily, payment processing companies provide small businesses with a variety of options to accept payments from their customers.

After determining the credit card types to accept and the methods to use to accept these payments, you can learn how to choose the right payment gateway and set up credit card processing in your small business.

Setting up a payment system for small businesses is not as difficult as it sounds and follows three simple steps:

Step 1: Choose the right payment gateway

The first step to small business credit card processing is opening up a payment gateway account. The payment gateway differs from a merchant account in that the payment gateway facilitates online transactions and allows you to process credit card payments. Whereas, the merchant account serves as a holding account where the payments first appear before being deposited into your company’s bank account.

All of your company’s transactions, no matter what type, are processed through a payment gateway. The payment gateway’s purpose is to approve or decline a transaction.

Here’s how a payment gateway works:

• The customer purchases a good or service with their credit card.
• The authorization of the credit card transaction needs to be verified.
• The transaction will now be verified. The customer’s bank either denies or accepts the transaction and passes the information back to the credit card processor.
• The credit card processor passes the information to the customer and the merchant.
• If the customer’s card is accepted, the goods or services are delivered and the transaction is marked as complete.
• The customer’s bank transfers the necessary funds to the credit card processor. The payment processor transfers the funds to the merchant’s bank.

After researching the many payment gateway options available, select the one that’s best for your small business. Be sure to select a payment gateway that contains all of the following features:

• SSL (Secure Socket Layer)
• eCommerce integration
• Accounting ERP integration
• Report generation
• Customer support
• PCI DSS compliant

Once you’ve chosen the best payment gateway for your small business, you can set up a merchant account.

Step 2: Set up your merchant account

The next step to set up small business credit card processing is to acquire a merchant account (also known as a payment processor). The merchant account is the holding account where credit card payments first arrive before being transferred into your business’s bank account.

Some payment gateway providers make it easy by including merchant services but be careful not to select a gateway strictly on the basis of its convenience. Payment processors may also have gateway services of their own or have partnerships with companies that provide gateway services.

It’s important to do your due diligence and explore the market before deciding how your business will conduct its credit card processing. When it comes down to it, your company should find a payment processor that meets all of your business’s requirements while being at an acceptable rate. Ultimately, the goal is to find a payment processor that has all the credit card processing solutions with the best rates and capabilities for their services.

Step 3: Accept credit card payments

Once your merchant account and payment gateway are set up, your company is ready to start accepting credit card payments.

Many payment processors will provide software that integrates into your account ERP software, allowing you to accept payments directly inside your ERP. Once this software and your merchant account are installed, you’ll simply log in and enter your customers’ payment information to start the payment automation process.

If you decide to accept credit card payments in-person, you’ll need a credit card terminal to process these payments. These credit card devices (also known as POS terminals) allow your customers to pay in person at your physical storefront.

If your payment processing services aren’t meeting your standards, it should be a simple process to switch payment processors, unless you signed a contract with the company. Many contracts for payment processors include a hefty termination fee that you’ll be aware of before signing — try to avoid companies with termination fees or large contracts.

Below are important features to consider when selecting a payment processing company for your small business:

• Low transaction fees with a favorable pricing structure. When meeting with payment processing companies, ask about their pricing model. What kind of fees do they have? What percentage of each transaction do they take? Ideally, you want your payment processor to have transparent pricing and be transparent with their fees.
• Payment integrations to automate credit card processing. Depending on your company’s needs, this can include integration with accounting or ERP software, eCommerce platforms, or physical POS systems.
• Fraud protection. You want a safe and secure PCI-compliant provider that helps prevent fraudulent transactions from occurring.
  Digital application and quick setup time. It’s important to find a payment processor that has a quick account and hardware setup process. In addition, you want a provider that offers 24/7 support to resolve any payment processing issues quickly.
• No hidden fees. This last one is crucial to look out for. Many companies will give you clear, upfront pricing, but when you’re finalizing the sale you find out that there are contract fees, termination fees, and setup fees. So, be clear with your discussion and make sure there are no hidden fees.