Building a Payment Gateway – How to Create Your Own Payment System?

Have you ever wondered why there are so many payment gateways on the market and why so many companies ask how they can build a payment gateway for their app? Just look at how much companies can earn from mobile purchases.

Approximately 50% of non-gaming and 79% of gaming apps today use in-app purchases—and they do quite well, since mobile users worldwide spend 38.0 trillion rubles on in-app purchases.

But for users of your app to be able to use in-app purchases, you first need to set up a payment gateway. A gateway is practically essential today for any business that wants to accept debit and credit card payments through its apps. However, choosing the right payment solution can be a daunting task.

We already discussed what a payment gateway is and how it works in a previous article. Continuing the topic, we'll talk about whether you should build your own gateway from scratch or integrate a third-party payment gateway.

Building Your Own Payment Gateway – Is It Worth It?

If you've recently thought about adding a payment gateway to your app and started looking into options, you've probably noticed two main ways to do it: either use one of the many third-party payment gateways, or build a payment solution yourself. Which is better? Let's be honest—in most cases, building a custom payment gateway has far more drawbacks than advantages. Creating a new gateway just to accept payments in your app is too expensive and complex.

You'll need to establish partnerships with a payment processor, create technical specifications from scratch, and ensure compliance with all necessary security standards such as PCI DSS, EMV, EMV 3D, Tokenization, and P2PE. If you want your gateway to support multiple payment methods including international payments, you'll also need to sign contracts with several acquirers (banks or financial institutions). And that's just the tip of the iceberg: owning a payment gateway means you'll have to undergo regular audits on how you store and manage cardholder information and what tools you use to protect payments passing through your gateway.

So, unless you plan to build your business around a new payment gateway and have a well-thought-out strategy for creating, protecting, and maintaining your new product, building a gateway from scratch is hardly worth it. You'll need to hire experts familiar with payment regulations and fintech for app development and to comply with payment processor rules, and the whole process will take a lot of time and money.

If you just want to offer in-app payments, a much better option is to use one of the available third-party payment gateway solutions, as they are much faster and cheaper.

Alternative to Building Your Own Payment Gateway – White Label Online Payment Systems

Okay, building your own gateway isn't the best option because integrating a ready-made gateway is far less costly and labor-intensive. But what if you still want to customize a ready-made app to your brand? In that case, maybe you should choose a payment gateway sold as a white label?

White label gateways work just like any other gateway—they have the same features, security level, and certification. But since they aren't branded by the provider, companies can customize the checkout process using their own names, logos, brand elements, or add new features they need.

Why should you consider white label gateways? First of all, they save a lot of time. When building your own gateway, you'd have to spend time developing technical specs, creating a token system, undergoing certification, and signing contracts with payment providers. In contrast, third-party gateways already meet all these technical requirements—you simply take the ready-made solution, customize it to your brand, and you're done.

And more:

• All issues related to purchasing, maintenance, security certification, and auditing can be left to the provider. If you were to build the gateway yourself, all these would be your responsibility.
• White label gateway providers regularly add new features, technologies, payment methods, and security measures to their platforms. As their partner, you can use these capabilities immediately after implementation, at no extra cost.
• Gateway providers already have multiple fraud prevention mechanisms and strategies, so you can be confident in the gateway's security and the data passing through it. With your own payment gateway, you'd have to develop security measures yourself. Additionally, most white label gateways easily integrate with third-party security, anti-fraud, and KYC solutions if you need an extra layer of protection.
• White label payment gateways can be easily integrated with your core system, back-office, and any other apps you need via API. Moreover, many of these platforms offer features to help you fill out reports for tax and regulatory compliance.

Of course, white label gateways also have drawbacks, but they don't outweigh the benefits. For example, when building your own payment gateway, you wouldn't have to pay transaction fees or any costs associated with using third-party services.

At first glance, this might seem like a reason to choose your own gateway, but in reality, third-party fees and transaction costs are minimal compared to the expense of building and maintaining your own payment gateway.

When building your own gateway, you also have full control over the design, navigation, features, and integrations within the gateway—meaning you can create a custom gateway tailored specifically to your business. In contrast, white label apps are typically quite limited in customization options.

However, building such a gateway requires significant time. First, you need to create a project team that includes specialists with experience in building financial applications and enough expertise to ensure smooth operation while anticipating unforeseen issues during development. Such a project may take months or even years to complete, whereas integrating a ready-made gateway takes much less time.

What Are the Options for White Label Payment Gateways?

As we mentioned, given the many fintech companies already offering their own gateways, it's much faster and cheaper to choose one rather than build a custom app. So, what exactly can you find on the market? Let's start by looking at the possible types of payment gateways:

Hosted or Onsite. A hosted gateway is a third-party checkout system that redirects users to the payment service provider's (PSP) page when they want to make a purchase. Essentially, this means the user leaves your website to pay and then returns to complete the purchase. Onsite gateways, on the other hand, operate as part of your site.
Dedicated. If standard white label gateways don't quite meet your needs, you might consider dedicated payment gateways. In addition to having more customization options for the checkout and adding specific features on demand, you also get a dedicated server (or servers) to host the gateway.
Licensed. This option is the "best of both worlds" as it allows you to customize the gateway as you wish without building a completely new one (though you still need to undergo PCI audit and certification). By purchasing a license for a chosen payment gateway software, you can adapt it to your business needs. Since you usually also get access to the source code, you have full control over the gateway's infrastructure and can modify the source code as needed.

Each type has its pros and cons. For example, hosted gateways are the easiest to set up, but you have no control over the gateway's security. Dedicated and licensed gateways offer more features and customization, but they are also more expensive.

Which Payment Providers Are Most Popular?

Another drawback of building your own payment gateway that we haven't mentioned is connecting the new gateway to various banks, card providers, and payment services. Given how many payment methods exist today (and the more methods a gateway supports, the better), you'd need to negotiate with multiple issuing banks, payment services, and credit card processors, and then integrate the payment gateway with all of them.

Meanwhile, major payment service providers (PSPs) already have established and secure connections and can offer several different payment methods for your online store—from credit cards and e-wallets to cash cards, instant payments, and even cryptocurrency.

Let's look at several payment solutions that are particularly popular among businesses.

PayPal

PayPal is an e-commerce payment platform that lets people pay without revealing any of their banking information (such as credit card numbers). Operating in 200 countries and accepting 25 currencies, it's one of the most popular gateways for online purchases. Currently, over 1.6 million websites use PayPal—this gateway is also popular for mobile purchases.

Stripe

Like PayPal, Stripe helps merchants accept and manage online transactions from anywhere in the world in various forms—credit cards, mobile wallets, cryptocurrency, and even "buy now, pay later" services. Stripe is currently available in 120 countries and can process over 130 different currencies, making it perfect for international brands.

Skrill

Skrill (formerly Moneybookers) is a UK-based payment gateway and digital wallet founded in 2001. Since its launch, Skrill has operated in over 120 countries, accepting 40 different currencies and more than 100 payment methods, including cards, digital wallets, instant bank transfers, and cryptocurrency. Skrill is also a very popular payment method among online casino and sports betting players.

Braintree

Braintree was created by PayPal as a payment system geared toward high-volume e-commerce businesses that want more control over their transactions. Along with the payment gateway and merchant account, Braintree offers small business clients tools and services to streamline internal processes, such as customizable sales reports, recurring billing, and integration with third-party apps. Braintree operates in 45 countries and supports 130 currencies.

Authorize.net

Authorize.Net processes over a billion transactions annually for over 430,000 merchants. However, compared to competitors, it has a small list of accepted currencies. For US and Canadian businesses, Authorize.Net supports payments only in US dollars and Canadian dollars. For UK and European companies, it supports eight currencies, and for Australian companies, three. A plus is that it offers several merchant features—recurring payments, invoicing, mobile purchases, a virtual point-of-sale (POS) system, and an optional card reader.

Apps Using a Payment Gateway – Examples

Almost every type of app—from productivity tools, e-learning apps, weather widgets, and of course games—incorporates a freemium model. Freemium means the app can be downloaded and used for free, but if you want access to additional features, you have to pay. Since today's app users are not very willing to pay for an app they've never tried, using a freemium model that allows users to try the app before buying a subscription is a great way to convince them the app is worth the money.

Thus, 97% of apps on the Google Play Store currently operate as free apps with optional in-app purchases.

80% of mobile apps we've developed at ESK Solutions also include a built-in gateway for seamless in-app payments—take a look at a few examples.

• Sportech PLC – a horse race betting system where users can place bets through a payment gateway.
• PelviFly – an app for women to regularly perform Kegel exercises. Users can make in-app purchases to access special exercise programs or book a consultation with a fitness expert.
• Solver – an e-learning platform where users can schedule online lessons and pay for them via the Stripe payment gateway.
• SmoothRemote – an app for adding remote job listings.

Conclusion

If you want to use in-app payments in your new product, adding a payment gateway to your app is simply necessary. And in most cases, choosing one of the available gateway providers is sufficient—it will take far less time, frustration, and budget than creating a completely new one.

If you feel overwhelmed just looking at the available payment gateway providers or want to discuss which gateway would best suit your new product, feel free to contact us. Many companies have already turned to us for help in choosing the right provider and integrating it into their apps, so chances are we can do the same for you. The easier and more secure you make it for your users to pay for in-app services, the more likely they are to click that "Buy" button.