Building a Payment Gateway: Does your Business Really Need to?

building a payment gateway

An e-commerce business is highly dependent on processes, tools and technology for its development, functioning as well as expansion. While some solutions are readily available to implement, others need to be built from scratch.

A payment gateway is one such solution which is extremely crucial for seamless transactions on a website or app. Every e-commerce business today needs a robust payment gateway to ensure hassle-free payments for their customers.

Being the principal element for successful transactions and instrumental to the business growth, many businesses deliberate on building a payment gateway from scratch rather than rely on an external one for their needs.

But is it really necessary to create one? This article looks at the pros and cons of both and helps you understand if building a payment gateway is essential for your business.

The payment gateway market

As more and more customers switch to digital transactions, online commerce has seen exponential growth. Mobile penetration and internet connectivity have further fuelled the rise of digital payments.

Businesses have also prioritised electronic payments and payment gateways are helping enable them.

The Indian payment gateway market is expected to register a CAGR of 15% during the forecast period (2021 to 2026). The integration of a payment gateway has become one of the most critical aspects of any business in every industry.

A business that wants to partner with a payment service provider can choose a suitable one by carefully analysing the multiple payment gateway solution providers in the market. However, it is also important that companies weigh them based on what best fits their business requirements.

Building a custom payment gateway is an alternate option. But considering the advanced solutions available, companies might seldom feel the need to own one. 

Here’s a look at both the options with their advantages/disadvantages.

Building a payment gateway vs partnering with a solution provider

1. Payment gateway fees

Most payment gateway providers may not charge a setup fee but impose a Merchant Discount Rate (MDR) on each transaction. The rates are a small percentage of the total amount and can slightly differ based on the mode of payment chosen by your customer.

This fee in the form of MDR might seem significant for some businesses that are yet to optimise and grow their sale volumes. Some others might want to eliminate these costs entirely.

Building your own payment gateway can save you the MDR costs which can in turn be a part of your net income.

2. Development costs

One of the biggest disadvantages of owning a custom payment gateway is the development costs associated with it. Building one from scratch can be a tedious process and cost you a lot more when compared to partnering with a solution provider.

Additionally, a business has to make an upfront monetary commitment to build a payment gateway when compared to a small fee on the transaction amount while partnering with one.

There are also maintenance costs to ensure that it is up and running all the time and you have to hire dedicated resources to take care of possible issues and breakdowns.

In the case of a payment gateway provider, the setup and maintenance is closely supervised by their team helping your business focus on other crucial aspects.

3. Custom features

Payment gateways combine a multitude of features to ensure that a business can operate smoothly. They are usually well-equipped to ensure hassle-free transactions for the users.

However, a business might still want a specific feature for their payment gateway or may prefer to add and edit new ones at a later stage depending on the requirements.

For instance, a certain payment gateway might be fulfilling all the necessary specifications but does not offer timely settlements to its merchant base. This may not work for a business that heavily relies on liquid assets for its daily operations.

In such a case, building a custom payment gateway can prove to be more beneficial.

Here are some other differentiating factors:

Building a payment gatewayWorking with a payment gateway solution provider
Lengthy certification processCertification processes managed by the provider 
Can be monetised and sold to other merchantsCannot be monetised
Have to strictly follow compliancesCompliances are managed  by the provider
Additional administrative burdenSimple onboarding process
Not cost-effective for small businesses Cost-effective for upcoming and small businesses
Innovations and upgrades less likely once product is built Continuous innovation and improvements enhances customer experience

It is clear from these comparisons that while building a payment gateway might save you some money (MDR) in the short term and allow the addition of custom features, it is not a favourable choice. Especially considering how advanced and evolved the available solutions are.

Paytm Payment Gateway for instance is built keeping in mind all the characteristics a business requires in order to ensure a smooth checkout experience. It is preferred by leading startups and enterprises across India as their payment solutions partner. 

Also read: Lower Operating Costs for your Business with these Payment Solutions

What makes Paytm Payment Gateway a reliable solution 

Paytm Payment Gateway offers a robust and reliable platform for businesses to conduct seamless transactions. Here’s a look at the key features it offers.

Industry best success rates: 250mn+ saved cards, 100mn+ saved bank accounts and 15mn UPI IDs enhance the checkout experience by freeing users from repeatedly adding payment details thus decreasing transaction time and increasing success rates.

Unlike other payment gateways, Paytm uses its in-house banking infra. It also has direct integration with the top six banks and 15 bank gateways, that reduce transaction time and make sure that the customers’ payments go through every time.

Built to scale: Paytm Payment Gateway can efficiently handle high traffic and peak loads, processing up to 3000 transactions per second. With 99.99% uptime, it is one of India’s most reliable payment gateways.

Security- Paytm Payment Gateway is compliant with all safety regulations with an SSL certificate and PCI-DSS Level 1 which means that the personal information of consumers is secure from online threats. Additionally, a dedicated team of 200 cyber security experts ensure that every payment is safely processed.

Payment methods: Paytm Payment Gateway provides more than 100+ payment sources to choose from and is the only payment gateway that offers fixed deposits as a payment source to customers. 

Dashboard: The powerful merchant dashboard comes with multiple insights and can be used to track sales, conversions, and success rates along with viewing transaction history, settlement reports, refund details and so on.

Instant activation: Paytm Payment Gateway offers 100% online onboarding, instant activation and with minimum documentation to help you start accepting payments within 24 hours. You can also accept international payments without a separate API integration.

Integrations with e-commerce platforms- Paytm Payment Gateway has integrations with 30+ e-commerce platforms/plugins including Shopify, Woocommerce and Magento.

Analytics: Paytm Payment Gateway offers insights & real-time analytics to compare performances across platforms/devices and get customer insights such as their user journey and purchase behaviour.

Pricing: Paytm Payment Gateway does not charge a setup and maintenance fee and offers a custom pricing plan specially designed for enterprises based on their scale.

Settlement: Paytm PG offers T+1 settlements on business working days along with batch and real-time settlements based on the business requirements.

Also read: 10-Step Guide to Expanding Your Business Globally


Finalising a payment gateway is one of the initial tasks when building an e-commerce website since it plays a crucial role in payments. In today’s competitive world it may be pointless to utilise resources for building solutions that are readily available. A business should rather focus on achieving faster growth using these offerings.

If you want to build a payment gateway from scratch, you should have thoroughly looked at the existing options to understand why working with a solution provider is not beneficial for your business. 

Taking into account the tech and infra advancements, partnering with a payment gateway is the best approach.



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