The sector of payment processing has experienced rapid growth in recent years. It’s expected to grow even faster in the coming years because more customers are purchasing goods, services, and subscriptions online.
Online payment processing service is a lucrative, rapidly expanding, and successful industry. Whether they conduct business online or in neighborhood stores, all businesses require a gateway payment processing service.
A Payment Processing Company
Credit and debit card payments, bank transfers, open banking transactions, alternative payment methods, and payments from e-wallets and cryptocurrency wallets are all managed, handled, and processed by a payment processing provider or company. Payment processors offer software (and occasionally hardware) that enables customers to pay for goods and services online or in physical stores.
Online payment processing service acts as a middleman between pertinent banks and payment acquirers, regardless of the currency or payment method used in a transaction or whether it takes place online or offline at the Point of Sale. The customers have purchased the goods/services they want after the payment has cleared.
Why Open a Payment Processing Business?
As e-commerce took off during the pandemic (the height of it, between 2020 and 2021), it accelerated forward with 3-5 years of growth in less than 18 months. Unexpectedly quickly, e-commerce behemoths expanded. The surrounding ecosystem also changed, including buy now, pay later providers and payment platforms.
Market valuations and that level of M&A activity demonstrated the gateway payment processing market’s profitability and high growth potential.
Expectations are high for the industry; growth is anticipated to occur between 2021 and 2028 at a CAGR of 19.4%. With support and guidance, you could also participate in this enormous industry that is constantly expanding due to the enormous growth potential for new multi-billion-dollar businesses.
How to Launch a Payment Processing Business?
Let’s now look at how to launch a payment processing business step by step.
Step 1: Understand your Business Path
Make a decision regarding whether you want to start your own Best payment gateway or become a third-party service provider or bill-payer service. Your payment processing business will collaborate with organizations that handle phone, utility, and mortgage payments as a bill-payer service.
Your payment processing business will be used as a third-party service provider to pay bills online, including credit card bills. You will make money by charging a small usage fee to use your services.
Step 2. Get Registered
If you’re interested in starting your own payment processing business, get in touch with the revenue commissioner in your area and submit an application for a business license. Visit the county clerk’s office in your area to register the name of your payment processing business. To submit your IRS form SS-4 for your Employer Identification Number, visit the Internal Revenue Service (IRS) (EIN) website. You’ll get your EIN immediately if you submit your paperwork online.
Step 3. Hire Personnel for your Payment Processing Business
Employees should be driven, focused, positive, and sociable. A qualified manager should make up one of the staff. Weekly schedules, onboarding new hires, making follow-up calls, and dispersing information packets should all fall under the manager’s purview. The other staff members are responsible for making phone calls, drafting invoices and statements, and assisting with phone or online customer transaction processing. There should be only one full-time employee and three part-timers.
Step 4: Updated Software
Go to a nearby office supply store. Purchase specialized software that will give your clients access to and viewing of statements, payments, and transactions. Hire a qualified web designer, if necessary, to assist in creating payment software for your payment processing business. Include encryptions to safeguard user privacy as well as the website’s administrators, such as the company’s founder, who will be handling payments.
Step 5: Promote your Payment Processing Business
Promote your payment processing business by running ads in newspapers, business newsletters, and social networking sites. Your advertisements should list the name of your payment processing business as well as its address, contact details, and business hours. All potential customers should be able to understand the advertisements with ease. Make brochures and business cards. Create an information package from the brochures and business cards to send to potential customers who provide their contact information on your payment processing website. To find out their recommendations and interests, follow up with the prospects.
Building Blocks of an Effective Payment Service Provider
Building a strong foundation on these three pillars will enable you to succeed in the online payment processing service market.
1. Market access
In order to gain market access and make the first sales, partners must select the appropriate market niche and possess some business acumen.
2. Competitive Technology
You should work with payment technology partners who create the most cutting-edge platforms based on their expertise in supporting various payment businesses.
3. Banking Partnership
Even if the first two points are done correctly, the company may still be at significant risk without the right banking partnership. The partnership structure should address the following:
- The payment facilitation model will help you get your clients to live independently and timely;
- Onboarding SLA in case the banking partner will still need to verify each client before allowing them to go live with the first payments; and
- No fixed-rate contract based on revenue-share conditions will prove the acquiring partner won’t prevent you from securing more lucrative deals on the market.
Take Away
The gateway payment processing sector has fueled the expansion of cashless payments globally and is one of the industries with the fastest growth rates today.
After following these steps, you have all the knowledge you need to start your business. You only need to carry out the marketing strategy if you write a strong business plan with a comprehensive marketing plan. Pay close attention to this process and note which techniques are effective and which are not.
While getting started in this industry can be very labor-intensive, anyone entering the payment processing industry may find the payoff well worth the effort.
