Today, most of the money operations are done online. Users demand quick and convenient ways to spend their money and the market gives them this opportunity. In such conditions, creating your own payment service becomes a very profitable endeavor with great potential for payback.

However, creating a payment service is quite a task. To create such a service, you need a generally high level of expertise, compliance with all regulations, and a complex infrastructure. Read on to find out what other challenges await you on this path and how to overcome them. In this article, we will tell you how to start your own payment service as quickly and cost-effectively as possible.

Key challenges of starting Payment Service

High initial outlay

The main challenge of starting a payment service company is high initial investments. You must set up infrastructure, get software, hire specialists, and make it all work. All this will require a lot of money and time. In total, you will have to spend about $500,000 on development and launch.

However, there is a way to significantly reduce the initial cost of launching a payment service. You can turn to a white-label solution provider. In this case, you will get up-and-running software that only requires your brand on it. Such software can be finalized if necessary and will still be cheaper than developing a solution from scratch.

In addition, there are SaaS white-label payment services, that eliminate the need for infrastructure. Fees in this type of solution are charged for each successful transaction and it’s a great way to decrease the initial costs drastically.

Licenses and agreements

Starting a payment service company always involves complying with strict regulatory standards and obtaining the necessary certificates. At the very least, you will need PCI DSS certification. It’s not easy to obtain, as you need to meet 12 main requirements and roughly more than 250 sub-requirements.

This challenge is relatively easy to overcome if you work with a third-party technology partner. Often, white-label payment solution providers help you with certification assistance.

Infrastructure and technology

Starting your own payment service will require substantial infrastructure. You need servers, payment gateways, fraud detection systems, etc. Choosing such infrastructure requires a competent specialist, and its setup and maintenance is another challenge. You need to be especially careful when choosing security solutions, as even the slightest breach can result in huge fines, as well as financial and reputational losses. In addition, the purchase of such infrastructure is a significant expense.

Nevertheless, this challenge is easy to solve if you work with a white-label payment gateway. In this case, the vendor can offer you to work on their infrastructure on a SaaS model.

Partnerships with banks and merchants

When you start your own payment service, you need to be concerned about entering into many partnerships with a wide variety of businesses and institutions. You will need to partner with banks, acquire merchant accounts, and find a reliable technology partner. With a white-label solution, you will need to spend much less time on this stage, but it is impossible to eliminate it completely.

Promotion

Another challenge of starting a payment service is to make your company profitable. It needs users and therefore you need to spend on marketing. You may require a substantial budget to gain market share. In addition, you should be concerned about hiring professional marketers and sales managers. A well-thought-out marketing strategy and good promotion specialists can make your payment service a prominent player on the market in a reasonable time.

How much does it cost to start a payment processing company?

Starting a payment service provider is a complex and multi-step process, and therefore it is impossible to say exactly how much money it will require. In general, it depends on the scale of the project, the number of features, and security measures. If you build such a project from scratch, it will cost you somewhere between $100,000 and $500,000. At the same time, the more features and level of customization, the higher the price tag. A complex and unique payment system may cost way over $500,000.

How to reduce initial costs?

However, there is a way to reduce the price significantly, and that is to take advantage of white-label solutions. For example, prices for a white-label payment facilitator with on-premises payment gateway start at $40,000. By choosing this option, you get the solution itself, various services from the vendor, such as customer and technical support, as well as the ability to customize the software to your needs.

You can reduce the price even further if you turn to SaaS solutions. There are white-label SaaS solutions that will free you from the need to build your own infrastructure from scratch. In this case, you just have to pay an infrastructure monthly fee (about $2,500) and a small amount for each successfully processed payment. On average, the fee is as low as 0.015 USD/per payment. In addition, the vendor company may offer additional services like customization of the payment gateway for your needs and assistance in certification.

As you can see, it can be quite difficult to start a payment service. However, if you aren’t going to take this path alone, but with a reliable technology partner, success and profit won’t be long in coming. Expertise, experience, and good technology solutions can save you time, budget, and free up your resources for strategic planning.

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