I want to look into starting (or buying) a payment gatway system similar to authorize.net (et. al.). Anybody have any ideas what is required to do this?
I understand the payment processing cycle and I understand merchant accounts, gateway, etc. What I don't understand is who does the payment gateway talk to when they receive the credit card/check info? Are they talking directly to visa/mc/amex/discover, etc? Are talking to a bank and the bank handles it from there?
Off of the top of my head:
1) You need to create the gateway.
2) Then you need to make it compatible with all of the payment platforms. I think there are 12 and they all have different APIs that you have to be compatible with. This is who the gateways talk to.
3) Then you have to get certified by each platform before they will let you connect to them. That usually takes a few months or so for each one.
4) Then you have to make sure you are PCI/CISP compliant. The major credit card companies have strict guidelines about the hardware and software you use from a security point of view. This means having your facilities reviewed regularly for compliance.
No relationship with a bank will be needed as by definition a gateway just acts as the middle man. You don't actually process any credit cards. You just send them off to the merchant's processor to processor and return the results. All funds are handled by the processor.
And that's just the technical and merchant account side of it (and that's just off of the top of my head).
I think the key is the fact that there may be 12 or so payment platforms/networks such as FDR. I'm not sure if that is a platform or a network or if they are one-in-the same.
Certainly a big task to set something like that up.
Very big. You will also want to make sure that gateway is VBV / MSC compatible as well. Starting an electronic payment gateway is no easy task and with over 80 of them out there in the United States alone, not that much competition.
The larger ones already have the market share and most people would not want to change because of the risks involved.
Building your own payment gateway is not an easy task. It is time consuming and expensive but it can be well worth it - all depending on what your intended purpose is.
Essentially, when you build a gateway - you are building the "middleman" in the transaction process. The gateway communicates directly with the front-end authorization network that is attached to the merchant's merchant account and you send and receive transaction details with that front-end per the specifications that they provide you with.
Typically, the first step is to get in touch with the integrations team at each network that you are interested in. Find out the process, cost and timetable associated with it. They will all usually require some NDA's to be signed and then will provide you with specs to code to.
During the certification process, they will run your systems through many tests and once completed, you'll be certified and added to their list of gateways.
Then you'll need to do a PCI/CISP audit. This can be expensive and will require quite a bit of infrastructure on your part as well as an on-site audit to make sure that everything is compliant.
Depending on what you intend to do with your gateway, the process may be worthwhile or it could be a major overkill. A lot of times, it is less expensive to lease, purchase or sell existing software or systems... especially with the coming price compression in the gateway side of the market.
I am also interested in what is need to become a Payment Gateway. What do you mean by "the first step is to get in touch with the integrations team at each network that you are interested in". Are you referring to getting a processor? Can you provide me with some recommendations.
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