How to Create an Online Payment System (2024)

FAQs

How to develop an online payment system? ›

Online payment systems are a way of facilitating payments for goods and services online. These systems consist of three parts – the payment gateway, the payment processor, and the merchant account – which between them handle the entire transaction.

In order for electronic payments to be successful the following factors should be considered for the payment methods which include reliability, cost, infrastructure, technology, customer information security and convenience of the payment method.

Building a payment gateway requires considerable technical knowledge. You'll need a team of experienced developers who understand not only how to build software but also how to navigate the complexities of payment processing, such as dealing with multiple banking APIs and integration with various ecommerce platforms.

The customer authorises payment via an online form allowing the business to automatically collect the funds when due. The business' bank and the customer's bank communicate and action the payment request when the payment is due, ensuring the correct amount is debited from the customer and credited to the business.

Credit and debit cards are the most popular payment method for making online purchases. With credit cards, the amount is debited from the user's current account at a later date, allowing them to spend more than their account balance. With a debit card, the money is withdrawn from the account immediately.

Using secure communication methods and tokenization, payment gateways communicate between your online store/website and your bank. Customer data is collected, validated, approved, and then the payment is accepted, debiting your customer's account.

Most payment processors provide prebuilt plugins or APIs for integration. If you're using a popular ecommerce platform such as Shopify, WooCommerce, or Magento, it might offer a ready-made integration. If you're building a custom site, you might need to hire a developer to integrate the payment API.

How to make an app like Stripe? ›

Following are the essential requirements for safe e- payments/transactions: Confidential - Information should not be accessible to unauthorized person. It should not be intercepted during transmission. Integrity - Information should not be altered during its transmission over the network.

Authorization and Authentication Process

When a customer initiates an electronic payment, the process begins with the authorization and authentication step. The customer provides their payment information, such as credit/debit card details, through a secure online platform or a payment app.

In this, It happens via confirmation of the OTP sent to your phone, which is very well secured. There is no need to do any kind of paperwork in online transactions. There are three stages of online transaction i.e. first - registration, second - placing the order, and third - online payment.

If you are a merchant that wishes to have their own payment gateway, you'll need a payment processor and an acquiring bank. Merchants already need a merchant account to accept digital payments, which are provided by acquiring banks.

Building a minimum viable product (MVP) for a payment gateway typically costs between $200K and $250K, with variations depending on desired functionality. This MVP would enable credit and debit card payments.

Here are the general steps to becoming a payment processor: market research and planning, creating a business plan and registration, compliance and regulations research, building financial partnerships, building technology infrastructure and processing platforms, testing and launching, scaling and expanding.