Creating a successful payments setup: Should you build or buy a solution?

Enterprise merchants with multiple integrations are familiar with the pressure of handling thousands to millions of transactions a day, ensuring that they are processed efficiently, securely, and as smoothly as possible. Optimizing a business’s payment infrastructure is challenging to say the least – but certainly worth it: New research from Nuvei has revealed that payment optimization can increase revenue by 30%.

If you’re interested in optimizing your payment setup, you’re probably asking yourself if it’s better to build a solution in house or to buy a solution from a payment technology partner. This is a valid and important question to ask at this stage, and one that you should take your time with answering. In this guide, we provide you with all the essential information to help you decide if you should build your own solutions for payment optimization or if it makes more sense to partner with a technology provider. We will cover:

• What makes a successful payment setup?
• How to build your ideal payment setup in house
• The pros and cons of building in house
• How to shop for a payment solution partner
• The pros and cons of buying payment solution

What makes a payment setup successful?

At its core, a payment infrastructure or payment platform exists to remove complexity for merchants who work with multiple payment integrations, like processors, acquirers and payment methods. It therefore performs several critical functions related to a business’s internal payments setup, including tokenization, payment acceptance, transaction routing, and reconciliation. 

For enterprise merchants who need to process thousands if not millions of transactions a day, it’s crucial that their payment layer is not only easy to operate, but that it is:

• efficient and improves productivity
• cost-effective and cost-saving, ideally driving revenue
• secure, maintaining the highest security standards
• flexible and ensures faster time to market
• reliable and scalable, it can handle high transaction volumes
• compliant according to all local regulations

As for what it should be able to do, a successful payment platform should have the following features and capabilities as a minimum:

1. Connect you to multiple payment service providers (PSPs) and acquirers. On average, enterprises use four or more PSPs.
2. Connect you to multiple payment methods, especially to local payment methods and alternative payment options
3. Enable you to route transactions easily and dynamically across your integrations according to your business requirements
4. Include an automatic retry feature that will automatically retry a payment with the same or a different processor after it was initially decline
5. Enable you to customize your checkout pages according to local customer needs and preferences
6. Use advanced tokenization methods in order to keep payment secure and enable seamless payments for recurring customers
7. Have accounting and bookkeeping capabilities with reconciliation and ledger features
8. Offer integrated analytics that collects data from across all of your integrations and offer actionable insights
9. Be equipped with advanced fraud prevention measures

This is the standard scope of a payment platform merchants should aim for. Now that you have a list of what it should encompass, you can already begin evaluating which of these functionalities you can fully cover in-house.

How to build a successful payment setup in-house

If you are considering fully building your own payment stack by yourself, you will need to cover a number of key features and capabilities, and you will have to build them from the ground up. This will require a highly technical team of developers and will either need to be sourced internally or hired specifically for the task. Before you decide to build, ask yourself the following questions:

1. What exactly do we need to build to unlock value? 
2. How long would it take to start seeing returns on my investment?
3. What roles are required for this project? Do I have these capabilities in my team? How easy is hiring these profiles? And how long would that take?
4. What are the one-off and recurring costs to build and maintain the product? This includes OPEX and CAPEX.
5. What are the necessary capabilities to support the project and how much time is needed for each?
6. How fast can we complete new PSP integrations?
7. What are the risks of building a new product from the ground up?

Below is a detailed description of the exact technical requirements needed to build a payment layer in-house.

Step1: Outline geographical coverage and map out respective PSPs/Acquirers/APMs

First and foremost, create an overview of all of the geographies and locations that your business operates in. Then, research which PSPs and acquirers operate in those locations. Here it’s important to be realistic about your business needs. As an enterprise company operating at scale, you will need at least four PSPs or acquirers to handle a large and international transaction volume. And don’t just rely on the biggest names in the market. Even though a lot of big processors operate globally, it’s the local PSPs and acquirers that get the best rates and processing conditions in their markets. 

You will also need to list out all the alternative payment methods (APMs) that are requested by your customers in their region. Offering locally preferred APMs is critical for offering an engaging checkout experience that will ultimately lead to more conversions.

So it’s advised to dig a little deeper and really do your research on which PSPs and acquirers make sense for the scale of your business and your locations. There are hundreds of PSPs out there, so invest enough time into this first stage so you can create a strong shortlist of integrations.

Step 2: Understand required features and crossmatch requirements with the pre-selected PSPs/Acquirers

Reflect on the questions in the section above and then create a detailed list of the features you will require from your payment setup. What are the core functionalities (e.g. zero authorization for subscription businesses, incremental authorization for delivery platforms) that you are looking for? What problems are you trying to solve? Try to be as specific as possible. 

Below is a short table of the most common issues that merchants face with their payment setups. 

Once you’ve made a detailed list of your required features, it’s time to match them against the features offered by your shortlist of PSPs and acquirers. You want to make sure that all of your requirements are covered in each market by the integrations that you choose.

You’ll soon notice that one single PSP cannot cover all of the needs of international enterprise merchants. So the next steps will involve contacting and integrating every single PSP and acquirer separately. 

Step 3: Initiate partnerships with each provider

Once you have mapped out your requirements, you can start contacting the providers on your shortlist to initiate the first steps of a potential partnership. Determine who from your own team will be the designated contact person, which ideally will also be the same person who will take over the role of project manager to oversee the entire integration process. Enterprises might want to have more than one contact person and project lead, as the scope will be more extensive and the integration efforts therefore more involved. 

Here are some items to clarify about your partnership:

• What is the pricing model? Is there a flat fee, a subscription, tier-based or do you pay by transaction volume?
• What is the scope of the integration? How long will it take and how involved will it be?
• When and how will support be provided? Will their technical team be on-call or do you have to submit ticket requests?
• What will the turnaround time be for technical support?

Step 4: Scope the integration efforts

After making a final selection of providers and entering into a partnership agreement with each one, be sure to check with their respective teams to understand what exactly is needed for integration. How technical will it be? How much of the technical responsibility will they take on? How much will you need to do on your end? How long will each stage take?

Here is a list of the most important technical considerations to verify before you make your integration plan: 

• Do they have a formal SLA? Do they commit to it?
• What's their availability? How do they measure availability?
• Do they have a fallback strategy?
• Do they depend on third-parties? How do they handle their failures/outages?
• Do they have an active status page?
• Do they send notifications if something goes down?
• Do they have an on-call team?
• What's the issue escalation strategy?
• Where are they hosted?
• How do they scale?
• What is their peak performance per min/sec?
• How do they recommend handling timeouts?

Step 5: Plan the integration and rollout for each provider

Once you understand the scope of each integration effort, it’s time to develop a detailed plan. This plan should outline the integration timeline, who will be responsible for what (i.e. what will your team do, what will the provider do) and who will manage the project and make sure that it stays on track. When planning the integrations, make sure to consider: 

• Will you integrate all providers simultaneously or consecutively?
• What is the integration process for each provider?
• Is there an integration that is more involved than others? 
• Which provider(s) take(s) priority in the integration process?
• Will you roll out each provider to your customers at the same time or one by one? 
• Who will be responsible for what part of the integration? Who is the technical team? What other roles or teams need to be involved?
• What’s the budget? What’s the timeframe? 
• What are major milestones?
• Do you have a contingency plan in case the integrations don’t go as planned?

Get into as much detail as possible when structuring the project timeline and assigning tasks. Also don’t forget to factor in that you might need to hire specialists to support with integrating and maintaining the integrations after they have implemented, so onboarding these new team members will also take up some time.

Step 6: Unify PSPs’ response code, reportings, settlements, notifications, refunds, chargebacks

The next step involves unifying the varying elements and data points that your different PSP integrations use in their payment flow. The challenge here is that every PSP has their own way of handling their flows. Statuses or response codes for the authorization flow for example will be called differently at Stripe than at Adyen. They are also likely to have different cut-off dates for settlements or different ways of naming cost elements, which could impact the reconciliation process. In order to maintain order and clarity in your payment processes, it is absolutely essential to unify and standardize all of these elements for yourself internally so that everyone in your team is always working with the same information. 

Step 7: Integrate each PSP

The planning is done, your team is in place, the timeline is set. Now the integrations can begin. Every provider is a little bit different, but in general, the technical integration for a PSP will follow these steps:

• Set up a merchant account with the provider.
• Receive the API keys securely so that your website can connect to the provider’s services. This will allow communication between your site and the provider.
• Install the provider’s library for your relevant coding language.
• Integrate the solution in the front end and back end. Front end integration usually involves a plugin where customers will be able to enter their payment information. On the back end side of things, your server must be set up to handle requests for payment. This is where you will use the API keys provided by the PSP.
• Create a checkout page to collect payment information. Some PSPs allow you to use their built-in checkout components or you can create your own custom checkout page. 
• Test the integration by running a few payments in a test environment to see everything is set up correctly. Pay particular attention to how your website is handling responses as well as any error messages.

If you’re experiencing issues, seek out technical support from the provider. You can reference their documentation to see if it provides the relevant solution. Or, depending on your agreement with the provider, you can reach out to them directly to resolve the issue. Be aware that PSPs, especially the big names on the market, service a lot of clients, so there might be some waiting time before your technical problems are resolved.

Step 8: Monitor each PSP’s performance 

It is important to understand that the work isn’t done after the integration is completed. It’s just the first step of a continuous process. Maintaining your payment integrations and monitoring their performance is a full-time task requiring your full attention if you want to truly improve your payment performance.

On the maintenance side, you will need to have a dedicated team member or members who will be the liaison between your company and the contact person from each provider. They will need to handle any technical or contractual updates to the integrations and to make sure that any changes are handled swiftly and expertly so that you can have uninterrupted service.

On the monitoring side, to get a holistic understanding of your payment performance, you will have to pull transaction data from each of your payment providers and unify them manually. Unifying scattered PSP data manually can be a laborious and expensive undertaking, so it’s crucial to factor this in during the early stages of planning. Assess if you have the right resources to monitor and maintain your integrations and to fix any problems as they arise.

The pros and cons of building payment optimization layer in house

Now that you understand what it takes to build a functional payment system in-house, you can weigh the pros and cons against each other. Whenever building your own solution, you can expect to have more freedom and flexibility to create exactly what you need for your business. However, this can come at considerable costs and can take a lot longer than buying a solution from a provider.

How to buy a payment solution by partnering with a payment platform provider

Since the dawn of ecommerce, merchants have been trying to optimize their payments as best as possible for increased payment success. In the last ten years, payment platform providers have emerged as comprehensive solutions that can help merchants improve their payments with one single, simple integration.

The main goal of a unified payment platform is to remove the complexity that merchants face when having to integrate and maintain every single PSPs individually. A unified payment layer acts as a simple go-between through which merchants can connect to all of their desired providers without having to integrate them all one-by-one. This also goes for maintaining the integrations: a payment platform provider takes care of keeping all integrations up-to-date and makes sure that everything runs smoothly so that merchants can experience uninterrupted business and payment processing.

There are a number of payment platforms on the market, but not all payment solutions are created equal. When shopping for a payment platform, there are some evaluative criteria to keep in mind. So get your payments team together and consider the following questions in order to create and evaluate a short-list of potential providers:

1. How comprehensive is the solution?

Take a look at the solution as a whole. How complete is the product? Does it cover all of your needs or only a part? Was it created with your business model in mind, i.e. for enterprises, is it scalable and designed to handle high transaction volumes? And what kinds of integrations does it feature? What is the level of security and compliance that the solution offers? You want to make sure to find a well-rounded solution that covers all the basics and has a comprehensive offering in terms of possible integrations that you might want to add down the line. Also, make sure that the security is robust and that the solution providers adhere to compliance regulations.

Key features that a payment platform should offer:

• Payment acceptance, on a global and local level
• Dynamic payment routing that directs transactions along the most optimal path
• Automatic fallback & retry to reduce churn
• Tokenization for seamless payments and a token vault for secure storage
• Payment reconciliation to track and validate money movements
• Unified analytics dashboard where you can aggregate scattered data from all PSPs and make data-driven decisions

2. How flexible is the solution?

When it comes to shopping for any service provider, merchants should be looking at the solution’s flexibility and customizability. This is especially crucial when comparing payment platform providers, especially if you choose to buy instead of build. How modular is the solution? Can you tailor certain features to meet your business’s specific requirements? If so, how difficult would that be? A good payment platform should help you to solve multiple payment-related problems and should be inherently customizable with engineering support provided when it is needed.

3. How agile is the provider?

You should also assess the agility of the provider. As a business that operates globally or is planning to expand into new markets, you want to be sure that your provider can scale with you. This means that the solution should be able to handle high transaction volumes and should be able to connect you to payment partners across the globe. Can the provider adapt to any future changes to your business plan, transaction volume or market operations? And how fast will they be able to adapt? A good provider will have extensive global experience, enabling them to be quick on their feet and be a partner in your expansion efforts.

4. What support does the provider offer?

Finally, ask yourself if the provider will be a true partner who will help you navigate the evolving payments landscape. Optimizing your payments for the long term is not a one and done kind of deal. It goes beyond the initial integration and is a constant maintenance effort.  If you go down the buying route, you must therefore look for a payment platform provider that will be hands-on, proactive and on board to solve any new challenges as they arise. Ask yourself: How much payment experience does the provider have? Who do they work with? What are their technical skills and knowledge and how willing are they to share their expertise with you? What you want to look for is a provider that gives support throughout your entire partnership and can help you with whatever questions you may have.

The pros and cons of buying a payment platform solution

Compared to building your own solution in-house, partnering with a payment platform is certainly less of a hassle in the short and long term. Buying means that you will be able to optimize your payment operations a lot sooner, as implementing a third party solution takes a maximum of three to four months, while building one in-house can stretch over twelve months or even longer. Maintaining a bought solution is also a lot easier than having to maintain your own solution, as you’ll receive support from the provider if there ever are any technical issues.

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The bottom line

Every business is different and has unique needs that need to be considered. After evaluating the information in this article and discussing it with your team, you might decide that building your own payment optimization setup better suits your needs than buying because you want to have full control of the project, down to the very last detail. Or you might have realized that buying is the better option because you want to trust payment industry experts to deliver a tailorable solution while you maintain your peace of mind and keep your internal resources available for other business-critical projects.

If you’re still uncertain about the best solution for your business, get in touch with our team to better understand if a payment platform makes sense for you and if building or buying is the way to go.

Whether you decide to build or buy a payment optimization solution, you now have the right evaluative criteria to make that decision.