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August 21, 2020 / by shoplattice / In update

Setting up of payment gateways- A comparison

Payment gateways are a kind of service provided by e-commerce applications, which help in the authorization of payments to online companies, services and the like. Some popular payment gateways include PayPal, Stripe, etc. However, in the current age, most companies set up their own payment gateways to make transactions easier.

Advantages of setting up a payment gateway.

Setting up a payment gateway of your own has the following advantages:

  • There is no need for paying high fees to other gateways which process your transactions.
  • All transactions can be controlled by you, without bringing in any third party.

Steps to develop your own payment gateway.

Setting up a payment gateway of your own consists of four steps:

  1. Making a payment gateway software.
  2. Find a host to run your software.
  3. Tokenization.
  4. Selecting banks or processors. The above four steps can be done in many alternative ways to match your needs.
1 Making a payment gateway software.

This can be done in either of two ways, by developing your own software from scratch, or licensing a software from a provider. The former is a more daunting and option, but it gives us more control in the transactions.

In case of licensing a software, it can be done either from a white label company, a process which is quite easy, or you could license one exclusively, which requires a little more work, but provides you with an exclusive software.

2 Find a host to run your software.

For this, you could form your own server infrastructure. Doing that would mean that you would need to maintain your data, have your development personnel and have an annual PCI- audit. This option is quite costly, due to the added expenses.

For a cheaper option, you can also use a PCI- compliant host like Firehost or Rackspace. Here, the servers are already located within a PCI- compliant framework.

Making your host PCI- compliant is extremely important in both cases.

3 Tokenization

The next step is to tokenize credit card information. The prime purpose of doing this is to allow merchants not to store credit card information for repeated transactions. Credit card numbers are replaced by tokens which are used in place of the actual information. This mode of encryption makes sure that the process is safe and hidden.

Tokenization can be done in two ways. One is called pure tokenization, where only the credit card numbers are tokenized. The other is called profiling, which partially or completely maintains a customer’s profile.

4 Selecting banks or processors.

The next step is to tokenize credit card information. The prime purpose of doing this is to allow merchants not to store credit card information for repeated transactions. Credit card numbers are replaced by tokens which are used in place of the actual information. This mode of encryption makes sure that the process is safe and hidden.

Tokenization can be done in two ways. One is called pure tokenization, where only the credit card numbers are tokenized. The other is called profiling, which partially or completely maintains a customer’s profile.

Which are the best payment gateways?

Ultimately, the best payment gateway will be one that is able to process a wide range of payment types. However, if you have a certain budgetary limit in mind, then you could try out various combinations of the four steps to comply with that limit.