Explore the comprehensive details about the payment gateways and how payment processing works.
In North America and Europe, people opt for digital payments rather than cash, and the rest of the world is also following. Studies also show that the global user base for digital payments has reached the 3 billion mark in 2024 itself.
In 2025, world leaders are paying special attention to this section of the fintech industry. In addition, thanks to the success of top payment gateways in the USA and India, such as Stripe, PayPal, Braintree, Revolut, and Venmo.
Now, institutions are in contact with top payment gateway development companies for unique digital payment services.
If you are also thinking of building one, make a plan and hire a trusted payment gateway integration company. However, before you proceed, you must know the ins and outs of building high-tech payment gateway software.
How Does the Payment Processing Work?
When people shop at a brick-and-mortar store, they receive the item and pay with cash. On the other hand, online payment processing is not a one-step process.
Now, let us go deeper and talk about the steps involved in processing payments.
Data Encryption
When customers check out in an online store after shopping, they get directed to the payment gateways. It could be the merchant’s site or a third-party payment gateway server. Here, customers choose the payment method.
Most eCommerce websites provide multiple payment options. It includes credit/debit cards and third-party apps, like PayPal, GPay, Amazon Pay, etc.
Once customers select the payment option, they enter the details and click the ‘Make Payment’ button. The payment gateway encrypts the customers’ information. It then goes to the business’s data server.
Authentication Check
The payment gateway now verifies the card details and checks their authenticity. The given information goes to the card network for authentication. It gets forwarded to the bank to either decline or authenticate the given information.
The payment processor receives the information after authentication. Next, the related bank prepares for the online payment settlement.
Transaction Approval
After the approval, the payment gateway receives the authenticated information about the merchant and buyer. The business’s website gets a transaction completion response.
Payment Settlement
By EOD, the business sends all the approved transactions to its bank account. Next, the bank deposits the amount. Businesses can also settle payments on a daily, weekly, or monthly basis, depending on requirements.
The payment gateway undoubtedly provides a seamless digital transaction experience. It only requires a few seconds to complete this digital transaction via payment gateways.
Payment Gateway vs Payment Processor. What Is The Difference?
How to Know if Building a Payment Gateway Is the Right Choice for Your Business?
Businesses can be in a dilemma regarding the viability of a custom payment gateway. They have the option to use the existing payment gateways with limited functions. Or, you can invest money to build a bespoke payment gateway.
Now, we will proceed with scenarios that showcase that you should build the custom payment gateway.
Customized Features
These days, digital payments are not limited to simple money transactions. Now, crypto transactions are also taking place. Thanks to blockchain, it provides a safe space for businesses to grow in a transparent network. So, if you are open to accepting cryptocurrency, it’s time to build your payment gateway.
Further, you can also integrate the latest technologies into your payment gateway. Technologies, like AI, ML, cloud computing, and big data, can help you prevent fraud and other discrepancies. As a result, you will boost sales, provide a better customer experience, and increase ROI.
Scalable Solutions
New features will be needed for your mobile app as your company expands. Hence, building a custom payment gateway seems a good option.
For example, Amazon Pay launched in 2007. This robust checkout system allows customers to make easy and fast transactions.
Cost-effective Solution
Grabbing your target audience’s attention and maintaining brand visibility are challenging. On top of that, payment gateway incompatibility with your existing system is the last thing you want. As a result, you can lose a significant share of your customer base and revenue.
On the other hand, payment gateways in the USA, like Stripe, PayPal, etc., are popular for their high pricing models. Some businesses do not find them beneficial in the long term.
Monetization via Payment Gateway
If you own an eCommerce platform or a fintech application, you can allow other merchants and businesses to adopt your payment gateway. You can charge a fee in exchange for your services and make extra cash.
Business Requirement
The best option is a custom payment gateway if you run a large company. Or, if you are growing your financial services to reach a worldwide clientele, build your payment system. You can also offer multiple payment options and compatibility with other payment gateways on your system. You will have full control over the payment process and upgrade the system when necessary.
Start researching trusted fintech app development companies. They will provide all the resources and an efficient pricing model to build a robust payment gateway.
Cutting-edge Gateway of Payment Gateway Development
Fintech is one of the industries adopting new technologies in its early days. These cutting-edge technologies are the driving force behind the huge surge in revolutionary financial applications. They ensure speed, accessibility, automation, convenience, and data security.
Here are a few technologies that the financial sector employs during the fintech app development process.
AI/ML in Payment Gateways
Machine learning and artificial intelligence help app owners make predictions, understand user behavior, and monitor patterns. They also take on tedious tasks to reduce manual labor, detect financial fraud, and produce effective results.
Near Field Communication in Fintech
NFC is one of the revolutionary technologies in the fintech industry. It makes mobile devices communicate and establishes a contactless payment system. People need to tap on their smartphones to connect them with the store’s point-of-sale terminal.
As a result, it transmits signals and completes the transaction without a credit/debit card. Google and Apple are the first ones to use NFT technology.
Blockchain in Digital Payment
Unlike traditional payment systems, blockchain offers a more secure and transparent way to transfer money. Moreover, people can
- Use smart contracts to transfer money on a secure network.
- Trace the transaction process without interruption.
- Eliminate third parties or intermediaries and save additional costs.
- Conventionally, transfer money overseas quickly.
- Enjoy high-level transparency and immutability.
Hence, blockchain maintains data integrity and facilitates peer-to-peer transactions securely.
MST (Magnetic Secure Transmission) Technology
It is another contactless transaction technology used in digital payment systems. MST uses magnetic signals for digital payments. It can work with old mobile devices with conventional magnetic stripes.
This technology works well with both modern and outdated devices. Samsung Pay is the best example of MST tech used for money transactions.
How to Build Successful Payment Gateways? Core Elements Breakdown
As per the latest research on Statista, eWallets are the most popular eCommerce payment gateways in the USA and the UK. Researchers believe that the electronic payments market will reach $20 trillion in revenue in 2025.
Therefore, creative payment solutions in the fintech sector are more likely to pique people’s interest. The time is right if you are considering creating payment gateway software. You can address the consumer’s daily struggle with your fintech app.
Here is what you need to do to build custom international payment gateways.
Ideation and Market Research
The payment gateway development project requires thorough research. You must
- Define your business goal to create a project roadmap.
- Know who your target audience is.
- Research their requirements, needs, and struggles.
- Estimate the transaction volume you wish to handle.
- Ensure local and foreign currency support.
- Select the payment gateway model. It could be hosted, self-hosted, API-hosted, or bank-integrated.
- List of payment gateway integration companies for budget-friendly and quality services.
Moreover, find out which technologies are the best for your app. You must know which offshore payment gateway integration company provides the expertise.
Design and Development
The design and development of payment gateway software is quite different from any other web and mobile app development project.
To embark on this journey,
- Find an experienced offshore payment gateway service provider.
- Lay out your expectations to choose the best fintech app development services.
- Select a simple and appealing UI structure.
- Choose the right web and mobile app development platforms and frameworks.
- Ensure the network processes, authorizes, and settles the payment securely.
You can build an in-house team from scratch. However, it can be time-consuming, tough to sustain, and expensive. So, outsource the project to one of the payment gateway integration companies for qualitative outcomes.
Security and Legal Compliance
Your payment gateway software must follow state and federal protocols in the USA. If your payment gateway application also serves international audiences, it must adhere to local security rules and protocols.
A few security protocols you must know about.
- PCI DSS (Payment Card Industry Data Security Standard) is to safeguard customers’ sensitive credit card data from hackers.
- KYC/AML (Know Your Customer/Anti-money Laundering) verifies the users’ identities and prevents online fraud.
- SOX (Sarbanes-Oxley Act) is for US organizations to ensure accuracy and transparency in financial reporting.
- GDPR (General Data Protection Regulation) is used in the EU countries to keep users’ digital data safe.
- PSD2 (Payment Services Directive 2) focuses on enhancing customer protection and authentication.
This also involves acquiring the required certifications and licenses. You must regularly monitor for the updated protocols and upgrade your payment gateway app.
Partnership with Financial Institutions
Partnership proposal timeframes with banks and financial institutions can be some of the most tiring and lengthy moments. You will need to integrate your apps with various banks, financial institutions, and credit card companies. So, you will need time for negotiations and contractual agreements.
Software Testing
After your payment gateway software development process is complete, the testing team analyzes it. Here, the standard testing manual evaluates the payment gateway software’s efficiency and effectiveness. It also ensures there are no bugs and defects in the final software.
Deployment and Maintenance
After testing, the development team finalizes the payment gateway software for deployment. It’s time to deploy the payment gateway app on the client site and check for compatibility. Once it displays satisfactory results, the payment gateway integration company hands over the source code to the client.
After the launch on the App Store and Google Play Store, it’s time for market feedback. The company works on upgrades based on customers’ feedback. They regularly perform standard maintenance and integrate new features as required.
Besides, building high-tech payment gateway software is no less than a roller coaster ride. You might face challenges while developing the payment gateway software.
What Are the Challenges to Payment Gateway Development?
Let’s address some of the most common challenges you must watch out for.
Fee Structure
It is one of the most common challenges payment gateway companies face. A vague fee structure can put the app development process on hold because you have to add features in accordance with it.
The payment gateway fee structure includes
- Platform fee for vendors
- Transaction fee for customers
These fees can make a huge difference in profitability. When your payment gateway system handles both local and international transactions, it becomes more challenging.
You must have a more suitable fee structure for chargebacks, cross-border fees, currency translation fees, etc. So, you do not have to lower your profit, and customers can happily pay too.
Design Issue
If the fintech app development company is not familiar with the business model, it could backfire. The development project for the payment gateway might take longer to finish than expected.
You need a user-friendly design to compete and enable customers to transfer money seamlessly. Moreover, a complicated design could throw customers out of the loop and leave your app in the dust.
Maintenance Challenge
Continuous maintenance of fintech software for better outcomes is not easy. Moreover, maintaining the fintech app requires a strong team of cybersecurity experts. Otherwise, you might install flawed protocols and security modules. It can put the customers’ sensitive information at risk.
Unique Solution Challenge
The fintech market is full of payment gateway options. Therefore, it can be tough for fintech companies to come up with a unique solution. The finance market is full of established finance companies delivering innovative payment solutions worldwide. Beating their strong market reputation would be tough for the new payment gateway software.
Security Risk
Integrating security measures to prevent digital fraud is a major concern for mobile app development companies in the fintech industry. They must
- Ensure the safety of the customer’s sensitive information.
- Implement every state and federal protocol.
- Follow a robust cybersecurity checklist and more.
Multi-currency support
Integrate multi-currency support to conduct international business. A disjoint checkout system can deter customers. As a result, it will affect the engagement and profit from foreign clients.
Therefore, while hiring for the eCommerce app development company, ensure it has expertise in integrating multi-currency support. So, people can buy in their local currencies.
Next, we will introduce you to some of the best tools and resources. They will help you build high-tech payment gateway software with ease.
Tools and Resources to Create a High-quality Payment Gateway
The success of the mobile fintech app depends on the appropriate tools and resource availability.
Here is what you need to develop a high-quality payment gateway.
- Database: For handling transaction volume, quick response time, user accounts, real-time updates, data analysis & reporting, and more.
- Cloud Storage: Helpful for storing and managing payment data remotely, accessing payment processing, preventing data theft, and more.
- Programming Languages: Useful for backend and front-end development. Also, it introduces app functionalities, adds security, ensures optimal performance across all devices, etc.
- Real Time Data Processing: For instant payment processing, a better customer experience, enhanced security, maximum efficiency, instant decision-making, etc.
- DevOps: For scalability, automation, cross-functional collaboration, preventing failures, and more.
| Resources | Tool Name |
| Database | Microsoft SQL Server | MongoDB | PostgreSQL | ORACLE |
| Cloud Storage | AWS | Azure | Cloud SQL | Google Cloud |
| Front-end Programming Language | HTML5 | CSS3 | JS | Angular | React |
| Backend Programming Language | Java | Python | Ruby | .Net |
| Real Time Data Processing | Rabbit MQ | redis | kafka | amazon Kinesis |
| DevOps | kubernetes | Katalon | Azure DevOps | Nagios |
Why Choose Tech Experts to Build a Payment Gateway?
There are several reasons why partnering with tech experts makes sense. An offshore payment gateway software development agency has experienced developers and designers. They can provide the following benefits.
- First, tech experts can leverage web and mobile app development frameworks and technologies. They can effectively complete the software development process faster.
- Second, bespoke payment gateway development is tedious work. Yet, tech experts can reduce time without compromising quality to give you a competitive edge.
- Third, payment gateway development requires significant investment. An experienced payment gateway integration company can offer budget-friendly services.
- Fourth, offshore tech experts are well-versed in the latest technological advancements. They can lower the upfront cost and effectively use technologies.
- Fifth, a payment gateway system requires expertise in security, legality, finance, and software development. Tech experts possess knowledge related to these areas and expertise too.
- Last but not least, tech experts can provide post-launch support and maintenance. Timely upgrades and maintenance can save you from possible financial losses and market failures.
Conclusion
A payment gateway indeed requires immense technical and business intelligence. So, your fintech app stands out in the sea of digital payment solutions. At ITFirms, you can find the best payment gateway service provider for your next project.
You can check out Konstant Infosolutions, Appinventiv, Chetu, One Click, and ScienceSoft, among others. They offer a team of experts for building P2P, online banking apps, eWallets, and various other types of digital payment software.
Besides, the important thing is building a secure and scalable patent gateway solution on a budget. Your state-of-the-art project should be stable and secure enough to handle massive transactions daily.
Payment Gateway Integration FAQs
What advanced features in your payment gateway software can set it apart?
Your futuristic payment gateway software must have.
- Compatibility with most payment apps.
- Robust, scalable, and secure architecture.
- In-app payment settlement with real-time updates.
- User-centric and appealing UI.
- Multi-currency support to accommodate international transactions and more.
How much does it cost for the payment gateway integration company to build?
The average payment gateway solution development cost is between $130,000 and $250,000. However, the total cost depends on several factors, including features, tech stack, developers’ hourly rate, project complexity, etc.
How long does it take to build the payment gateway development project with advanced functionalities?
In general, there is no set amount of time to finish the payment gateway development project. But it may take a few months to a few years for the development to complete. It depends on the payment gateway model, business goals, tech stack, and more.