As the world speeds up, we want our payments to go fast and smooth. People are tired of checks and complicated bank transfers. The cash has been out for quite some time. As a result, PayPal, Venmo, ApplePay, and other…
The 2022 Manual to Payment System Architecture
The payments in the 2020s don’t take much time. Just swipe your credit card, or confirm your Face ID, and you’re good to go. However, developing software for a payment system is challenging because of the so-called “side effects,” like refunds, disputes, and audits.
eCommerce businesses are the ones actively using payment systems. In addition to processing transactions, these systems ensure the safety of customers’ data. High-level encryption and integration with the other programs make payment quick for the buyers and reliable for the merchants.
The 2022 Statista report predicts the total amount of fraudulent transactions worldwide will increase to $38.5 billion by 2027. Therefore, if you consider payment system architecture, you should comply with the risks of fraudulent transactions and prevent your clients’ negative consequences.
We know how important it is for you to gain more loyal customers. Therefore, if someone is exposed to weird financial schemes, it is a bad sign for the company’s reputation. In this article, we’ll share the experience Devox Software has in payment architecture; the types of payment gateways, and the specifics of working with different platforms.
Defining Payment Gateway
A payment gateway is a customer’s payment information guardian. It may be a POC terminal in a physical store or a checkout portal on a website. The function of the payment gateway is to accept financial credentials and transfer them to a merchant’s bank account.
Benefits of Custom Payment Gateways
Custom development has advantages when discussing fintech services. But if you decide to engage in payment gateway system design, you’ll get certain benefits, including:
- Saving on development and subscription fees.
- Ability to modify user’s infrastructure according to your business needs.
- Ability to process multi-currency transactions.
- Increasing the profits (since you don’t have to rely on third-party apps, which require commission).
Challenges of Custom Payment Gateway Development
For as long as you’re designing a payment gateway architecture, you may face some of these issues:
- High pricing: fintech software development is quite expensive because you create the whole system from a scratch.
- Time-consuming: building a solution, compatible with other systems and personal software processes (PSPs) cannot be done in a few days. Not even in a month.
- Cybersecurity: you’ll need good experts in the area to ensure the modules follow security protocols.
Payment Gateway Architecture: the Main Points
A payment gateway is a transit station between a customer placing an order and the issuing bank receiving money. The key factors to consider for payment system architecture include
The main perk payment gateway has is a seamless transaction. People don’t even notice how money goes from a credit card, because it happens in a matter of seconds. The truth is, your costs pass a complicated itinerary before they reach a merchant’s bank.
Payment System Design Architecture: How It Works
Let’s take a routine scenario when a customer wants to buy something online. Here’s a look at payment architecture at work:
If there’s no problem with the payment procedure (the customer has enough costs and no limit on a card), the issuing bank informs PG about a successful transaction. That’s when the user gets an online receipt and receives an order confirmation.
The Reasons Online Businesses Need Payment Systems
Payment architecture is necessary for any business, making transactions online (financial institutions, eCommerce industry, and subscription services), due to several reasons:
- Security protocols, encrypting financial data: so the customers will ensure their credit card details are safely stored for future payments
- Payment system sends funds directly to the receiver without interruptions
- Flexibility in terms of payment methods: you can accept Mastercard, Visa, American Express, or any other provider, increasing the number of international customers
- Streamlining payment processes: you’ll be able to assist more customers, receive more feedback, improve your company’s reputation, and increase revenue.
The Types of Payment Gateways
A payment gateway is a relatively new approach to online banking and processing online transactions. With technological advancements, business owners have quickly moved from direct bank transfers to more secure online payments.
You have to adjust a payment architecture in accordance with what the business needs. That’s why there are different types of payment gateways, each one with its specific features. Besides, you have to integrate a payment gateway into your website to start gaining customers.
Here’s a short overview of payment gateways, depending on their development strategy.
Payment Systems Based on Distributed Architecture
The distributed architecture includes the software components, which are fully independent, and can function across various geographic locations. These components communicate via short messages and have to complete the tasks assigned to them.
Using distributed system architecture, your business will meet the highest requirements of reliability and speed, making software scalable at the same time. One of the classic examples of such a gateway is Paypal.
Payment Systems Following Security Protocols
Safety is the most vulnerable feature every payment system has. By choosing to check out online, customers entrust you with their payment information, and, therefore, all the money they can get from a credit card.
The platforms with solid security protocols are Stripe, Square, and Paypal. They are considered one of the best systems for secure transactions.
Before creating a payment platform, make sure to comply with the following standards:
- PCI DSS Level 1: to avoid identity theft
- PSD2 (stands for “Payment Services Directive”): to regulate the third-party financial providers
- KYC (stands for “Know Your Customer”): to run verification account checks from time to time
- AML (stands for “Anti-Money Laundering”): to protect the accounts from criminal monetary activity.
Payment Systems Supporting Subscriptions
These systems are the ones providing recurrent payments; they repeat certain transactions in an agreed period of time (usually, a month).
The best way to set yourself up a recurring payment system is to have an all-in-one merchant account, that handles transactions, plus reliable security features (as customers keep their information online).
A subscription is something a modern person can’t live without. Therefore, no need to mention the giants like Netflix or Apple Music, featuring this type of payment gateway.
Payment Systems with SOA-Oriented Architecture
A service-oriented architecture (SOA) is a type of software development, that uses web services for business applications. Business owners implement SOA together with simple object access protocol (SOAP) and web services description language (WSDL).
There are three main roles in SOA building blocks: service provider, service repository, and service consumer.
The main benefit of SOA is that each service has its database and performs a specific function. The services communicate through application programming interfaces (APIs) only. The developers use the SOA principle for developing mobile banking apps.
You may find different payment gateways and common examples in the tab below.
What to Consider When Choosing a Payment System Architecture?
Finding the best payment option for your platform is a long process. Do your research, and find opportunities to sell and attract more customers. Don’t forget, that even though payment is the final stage of purchase, it defines the customer’s feedback and the Repeat Customer Rate (RCR).
The main factors to consider, when looking for a platform gateway are
- Security: the security standards should comply with the PCI DSS rules, and meet the main requirements of fighting fraudulent or scam activities.
- Seamless website integration: payment gateway needs to have reliable customer support, integrate with other applications, and quickly resolve any issues.
- Time of payout: the reliable PG services are stable in payout terms. The time varies for every company, but the average rate of payouts should be every two weeks.
- Multi-currency support: as mentioned earlier, you should let international customers come to you. And having payment options with different currencies is the best way to do so!
The main features of the payment system are integration and security. Customers entrust you with their payment information, wanting to receive exceptional service. That’s why you have to consider these four main factors to avoid unpleasant situations in the future.
5 Stages of Integrating a Payment Gateway into a Website
So, before you start a payment architecture process, make sure you complete the mentioned steps:
Devox Experience in Payment System Architecture
Devox Software specializes in software development and consultancy issues. We are experts in building social media platforms, SaaS products, and business intelligence services. We also have skills for building payment platforms for different industries: whether it’s a retail store or a financial institution.
We are an IT outsourcing company with facilities in different countries. Our portfolio includes applications made from scratch with integrated payment systems. There’s no ambition we can’t fulfill; because, of a dedicated team, we reached over $1 billion in client capitalization this year.
The Bottom Line
Payment system architecture is an integral part of eCommerce, SaaS, and payment providers. That’s why developing your very own payment gateway can be a winning solution.
The main benefits of payment gateways are their easy scalability and security. When customers input their credit card details online, they entrust you with very sensitive information. That’s why the primary concern of payment systems is protecting users from any fraudulent schemes.
If you need to create a payment system from scratch, Devox Software is the right place to call! We will provide cost- and time-efficient solutions, protecting your business from financial pitfalls, and setting it on the right track.
Contact us now to expand your business opportunities!