Why Choosing Your Own Payment Gateway Matters: Tailoring Your Payment Stack

As an ISV, adding payments to your services involves decisions about the providers you’re going to work with. And one of the choices you’re likely to encounter as you develop your payment stack is your choice of gateway.

Many processors offer gateways as part of their suite of acquiring services. So once you’ve chosen your processor, you can just use their gateway. Easy, right?

Well, maybe, maybe not. The gateway available through your processor may be a fine choice. But you have the right to make a different choice, and you might want to avoid being locked in.

We’ll talk about what that means and why it’s important. But first, let’s start with the basics.

What is a gateway, and who offers gateway services?

A payment gateway is where transactions enter the payments system. The gateway sits between the merchant and the processor to capture card and transaction data. It encrypts the data and submits it to the processor, where it is then routed first to the card networks and then on to the issuing bank.

In a physical retail location where POS terminals are used, a gateway acts as an intermediary between the software in the terminal and the processor. For online transactions, the gateway function may be offered through an API that integrates with the point of purchase.

Some companies, such as Cybersource and BridgePay, offer standalone payment gateways. Processors, such as Worldpay from FIS, also include payment gateways among the acquiring services they offer.

Which brings us back to what seems like the easiest option. Your processor will likely offer to set you up with their preferred gateway, which certainly seems simple on its face. Because a gateway is a gateway is a gateway, right?

Actually, not at all.

Why does the choice of gateway matter to payment providers?

As you evaluate gateways, you want to seek out a setup that best serves your business and your vertical. Different gateways support different industries, countries, transaction types, and payment types.

For example, field service providers – such as HVAC and lawn care companies – support technicians in the field working at multiple locations throughout the day.

They might need support for taking payment on-site on mobile devices, using whatever payment type the homeowner prefers, as well as through recurring billing for customers on a regular maintenance schedule.

Property managers, on the other hand, likely need to enable online payments and the ability to save payment details so their renters can easily pay their rent on time every month without the hassle of dropping off a check.

And medical practices might want to take payments in a variety of ways: in person through countertop terminals, directly from an invoice, over the phone and through online portals. So they need to work with a gateway that supports their hardware as well as the other points of payment with a consistent experience.

Also, beyond simply packaging up transaction data and routing it on, payment gateways offer a variety of ancillary services. Some offer tokenization or fraud protection, for example. So you’ll want to find a gateway that offers those extra services that you want for your business.

Not every gateway supports every requirement, so it’s important to shop for a gateway that can support yours.

Which brings us to one last point.

Should you build your own payment gateway?

In a word, no.

Unless you are in a unique industry where no one is offering the services and support you need to serve your clients, it’s not necessary to build your own gateway.

There are many gateways already in the market, some of them very specialized. You’re very likely to be able to find a gateway or several to meet your needs.

Gateways and portability

Gateways can integrate to multiple processors, which means that you have the freedom to change your acquiring bank or processor while keeping the gateway you love, without having to change the payment integrations to your software.

Keeping these functions independent means you can make changes to adapt to your changing business model down the road with more ease and avoid being locked into providers that don’t quite suit your purposes.

Plus, choosing (and integrating with) your own gateway is less work than you might think. From a tech perspective, integrating a new gateway can happen within a couple of weeks. And your merchants will not have contractual relationships with your gateway. This means there will be no need to “repaper” if you change gateways.

You have a choice.

Your gateway is an important part of your payment stack that you should treat as a standalone decision. You’re already picking out the pieces – your sponsor bank, for example, or your hardware – that best suit your merchants and the services you provide. In the same way, you should pick the gateway that’s right for you.