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What Businesses Need to Know About Integrating New Payment Gateways


Cash isn’t king anymore. Electronic payment has rapidly become a critical system of businesses everywhere.

Yet many businesses suffer from insufficient payment gateways. Some are outdated and don’t provide the payment options today’s consumers demand. Others are overly complex and detract from the customer experience.

Two solutions are open to businesses facing this dilemma. The first is to integrate an additional payment gateway. The second is to build their own system.

In this article, we’ll explore both solutions and show why, in either case, it’s important for businesses to take steps to phase development, keep legacy systems live and avoid disruption as much as possible.


When to Use Multiple Payment Gateways

It’s common for many kinds of businesses — from e-commerce stores to SaaS providers — to use multiple payment gateways. The benefits of doing so are substantial.

The biggest benefit of integrating two or more payment gateways is the ability to provide as many customers as possible with their preferred payment method. Not having a preferred payment option disrupts the customer journey and can lead to abandoned carts, says Brandon Batchelor, director of sales and strategic partnerships at ReadyCloud. But it’s easily remedied by integrating another gateway that provides a different payment option.

Different payment gateways can also boost conversion rates, Sandra Wróbel-Konior at SecurionPay writes. Some gateways provide different features like one-click payments, for instance, that can dramatically increase the likelihood of a conversion.

Finally, businesses are more flexible and resilient when they use multiple gateways. This is particularly relevant for businesses who operate internationally, writes Peter Mollins, senior vice president of marketing at Spreedly.

“As you work with a gateway in a particular region, you may discover that fees, contract requirements, and other business issues degrade the value you get from your relationship. By working with multiple gateways, you can readily shift your transactions to another partner as needed.”

It also reduces downtime events where your gateway is completely unresponsive, Mollins adds. “When that happens you can lose a tremendous amount of customer goodwill, not to mention revenue. But with multiple gateways on hand, you can efficiently re-route transactions through an alternative gateway with limited disruption.”

This kind of scenario can happen to even the biggest brands, as Anusha Murthy, a tech writer at Chargebee, points out. In 2016, e-commerce marketplace Etsy experienced two payment processing disruptions. Both occurred because the company’s vendor could not process credit cards, leaving sellers with no alternative payment methods. It lasted for several weeks and caused no small number of issues between the platform and its sellers.



When Building a Custom System Make Sense

While there are many benefits to operating multiple gateways, it isn’t always the most viable way to update or upgrade a company’s payment offering.

It's a lot more work to manage multiple payment providers, writes Alina Turchenko, head of content at Corefy, and often requires a dedicated team. They’ll need to manage each account, monitor providers’ health, and resolve technical issues as and when they appear.

“Having your transactions processed through multiple payment gateways also deprives you of a comprehensive view of your performance,” she adds. “It leads to the need for manual systematisation and analysis of all that data. The more gateways and merchant accounts you have, the more manual work and time you’ll need to reconcile, and the more errors you can make.”

As a result, more and more businesses are choosing to build their own payments system. Doing so is no longer limited to banks, Reinhard Höll, et al. at McKinsey write. “Companies with strong ecosystems can take advantage of them to set up networks and schemes with their customers, suppliers, or other third parties.”

Businesses typically have three options when building their own payment systems, writes the team at Paylosophy:

  • Build a gateway from scratch and handle everything themselves.
  • License the source code of an existing provider and deploy it within your own environment.
  • White label a payment gateway, which can save time but limits your scope.

The first option is the one with the most upside, writes Yuliia Mamonova, head of content at Lemon.io. Although it will require significant resources to build a gateway, there are no ongoing payment fees to deal with. Everything can be tailored to a business’ needs, too. Only the necessary payment options need to be integrated making for a more streamlined checkout experience. Businesses also gain full control over their data during a period where third-party data and privacy concerns are at an all-time high.



Guarantee Uptime With a Phased Approach

Whether businesses replace a legacy payment gateway or introduce a new one to operate alongside existing systems, it’s important to approach things in a step-by-step manner to ensure customers can continue to pay.

Shifting to a new payment system without a transition period is a high risk, high cost approach, writes Feza Tarhan, principal consultant at Diebold Nixdorf. It’s not uncommon for these kinds of projects to fail, even when significant time, money and resources have been invested. The impact can be long lasting, she adds. “Historically, shifting from legacy system ‘A’ to the next generation system ‘B’ has taken a toll on the institution’s current operations, budget, and resources making a move.”

Using a phased approach, new gateways and legacy gateways run alongside each other. The legacy gateway will still handle the majority of transactions while the new gateway continues to be tested and finalized. In doing so, there is a trusted and reliable backup if the new gateway should fail.

Businesses can achieve this using a canary deployment technique, where software is incrementally released to a small subset of users, explains Geshan Manandhar, lead software engineer at Flagsmith. “By design it is low-risk, as a new feature is only deployed to a defined subset of users which is a small number to start with. It also provides a path to test out a new version on production with minimal harm in case anything goes wrong.”


Other Strategies to Keep Disruption to a Minimum

It’s not only the development and testing phases where businesses should take steps to keep downtime and other disruptions to a minimum. Precautions should be taken at every stage of the process.

Businesses should start by gaining support and sign-off from key stakeholders, writes Scott Middleton, a product advisor with Silicon Valley Bank. “Determine who from executive leadership and your peer community needs to be in the know. Educate them about the payoff of the migration, the steps being taken to minimize transition impact and the timeline. Focus on payback that aligns with company goals and their priorities. Provide routine updates so the project remains a priority.”

Next, focus on building the right team. Naturally the finance department will play a lead role, but it pays to have input from developers experienced in the fintech industry, too. This is essential, says Vasyl Soloshchuk, CEO and founder of INSART, who claims everything from planning to development to testing takes significantly longer when using developers without domain knowledge. Costs also increase as a result.

Whether businesses integrate an additional off-the-shelf solution or choose to control the entire process through a custom-built gateway, there are few areas of the business that are as important to get right first time than payment processing. Businesses must consult their team and third-party experts to identify the right solution and ensure a seamless upgrade. There is no room for error when it comes to payments.


Images by: Clay Banks, CardMapr, ThisisEngineering RAEng

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