Being one of the fastest-growing in the world, the Fintech market is projected to reach $492 billion by 2028, growing at a CAGR of 16.8%, according to Exploding Topics. These impressive estimates gave rise to several fintech development challenges, and the payment gateway development shares most of them. In this article, we will provide a detailed overview of how to build a payment gateway most efficiently, sharing some actionable insights from our tech experts. 

The adoption rate of payment gateways dramatically increased during the COVID-19 pandemic, and as the world moved to other economic difficulties, payment gateways are becoming more popular than ever. According to Statista, the total transaction value of digital payments is expected to show an annual growth rate (CAGR 2023-2027) of 11.83% resulting in a projected total amount of US$14.78tn by 2027. So, in the next few years, you should capitalize on digital payments to get the most revenue for your organization, and we will help you do just that!

When Building a Payment Gateway is Required, and Who Needs It?

Integrating an existing solution is hard enough, so why may your organization need to build one from the ground up?

  • Customization: You need to cover specific business requirements like having specific types of transactions, currencies, and payment methods. There can be a situation where an off-the-shelf solution has several generic features and lacks business-critical functionality for your case, so there is a need to hire a dedicated development team for a tailored solution.  
  • Cost-Efficiency: Existing solutions charge high registration and usage fees, that, with many transactions, may result in enormous expenses for the company.  
  • Additional Source of Income: Having a custom payment gateway, a company can become a payment gateway provider for other businesses, receiving an additional stream of revenue.  

Many companies may benefit from having a customized functionality, however, the most common examples include:

  • Large Enterprises
  • E-Commerce Platforms and Marketplaces
  • Banking and Financial Institutions
  • Nonprofit Organizations
  • Educational Platforms and Institutions
  • Organizations in Travel and Hospitality Industries

How the Payment Processing Works and The Role of A Payment Gateway

Payment processing is all about facilitating the transfer of funds from a buyer to a merchant in exchange for services or goods. Key steps of this process include authorization, authentication, and settlement

In our recent article, we have explained the essence of payment processing in more detail and prepared a guide on how to develop a payment processing app step-by-step!

The payment gateway is a critical component in this process because it acts as a bridge between the point-of-sale system or website and all financial institutions involved. 

how payment gateway works

Key Steps of Payment Processing Include:

  1. Initiation of Payment: the customer adds items to the cart and goes to the checkout or Point-of-Sale terminal. 
  2. Data Encryption: the customer’s payment information is entered into the checkout form and encrypted by various methods like SSL (Secure Socket Layer).
  3. Transmission to Payment Gateway: the payment gateway receives the encrypted financial information and acts as a secure intermediary that facilitates communication between the merchant’s system and the financial institutions.
  4. Authorization Request: the payment gateway sends an authorization request to the issuing bank, which seeks approval for the transaction and verifies that the customer has sufficient funds or credit to complete the purchase.
  5. Authorization Response: the issuing bank sends an authorization response back to the payment gateway. The response includes information on whether the transaction is approved or rejected and additional information. 
  6. Transaction Approval: after getting approval, the payment gateway allows the merchant to proceed with the order. 
  7. Settlement: when the transaction is authorized, the merchant’s acquiring bank (the bank that maintains the merchant’s account) and the issuing bank work together to settle the funds. This settlement involves transferring funds from the customer’s account to the merchant’s account. 
  8. Confirmation: the process ends with the gateway communicating the transaction status to the buyer and merchant. 

How to Create a Payment Gateway: Core Elements Breakdown

Planning and Choosing the Right Technology

So, your business needs something other than top off-the-shelf payment gateway solutions like Stripe, Square, PayPal, or Authorize.Net, and you decided on building a payment gateway from scratch. This is a fascinating journey that includes creating your infrastructure, integrating necessary payment processors, developing custom functionality (saving credit or debit card information, for example, or billing and subscription features), creating a CRM system, implementing essential security features, and obtaining required certifications.

Custom payment gateway development

As for choosing the right technology, there is no short and sweet answer to the question of the perfect tech stack for your upcoming project. It will be a good idea to start from a high-level perspective based on your specific business needs, determine what modules you may need, and then dive deeper into the details. 

Front-End Components

When you wonder how to create a payment gateway for a website, the first thought is, probably, how it looks. There are several UX elements, that are must-haves in this case:

User authentication

Implementation of the secure authentication mechanism for users and admins, with possible integration with single sign-on (SSO) solutions.

Payment form

Designing a user-friendly payment form where users enter their payment information, such as credit card details, billing address, and any additional required information.

Responsive design

Adhering to the concept of responsive design, meaning that the payment gateway’s front-end components are designed to work across various devices and screen sizes.

As for the technology stack, it is possible to develop the aforementioned, as well as the front-end side of CMS with commonly used technologies like HTML/CSS/JavaScript and frameworks and libraries including React, Angular, Vue.js, jQuery, and Bootstrap. 

Back-End Components


On the enterprise level, we will be working with large amounts of transactions, so self-hosted servers will not withstand the high load and become more and more expensive with the expanding number of operations. The obvious solution is leveraging Cloud Computing, if you want to focus on building a payment gateway from scratch and improving its business logic, and not be stuck in server management. 

If Statista is to be believed, Amazon Web Services leads the market of Cloud Infrastructure Service providers with 32%, staying ahead of Microsoft Azure with 22% and Google Cloud with 11% respectively. 

Dmytro Nesterenko: Software Development Engineer, SPD Technology

Dmytro Nesterenko

Software Development Engineer, SPD Technology

“Cloud infrastructure offerings from all three market leaders Amazon, Microsoft, and Google are equally suitable for payment gateway development, they only differ in pricing and slightly differ in available features. We work with Amazon AWS as the most developed and powerful Cloud provider in the world, however, Microsoft and Google offer enough tools and capacities for a payment gateway software development company to build a solution. The only thing for sure is that Cloud infrastructure is a must-have, and hosting your own servers will limit the growth of your organization.”


So, if AWS becomes your Infrastructure-as-a-Service of choice, you will already have predetermined infrastructure tools integrated into this solution that your developers can work with. This means that your back-end tech stack will be defined by the available technologies of your Cloud Infrastructure provider. 


As a part of a Cloud provider, your developers will receive several infrastructure solutions to choose from. In the context of payment-related solutions, the best choices will be scalable and regularly updated databases, able to withstand high loads and the ones that can provide high levels of server and data security.

Volodymyr Soska: Software Development Engineer, SPD Technology

Volodymyr Soska

Software Development Engineer, SPD Technology

“Data handling for payment gateways has a specific set of rules and regulations, for the developers to adhere to. There is a certain way to receive sensitive financial data, store it, and share it with the participants in the process. So, the requirements for the manipulation of the financial data play a key role in choosing the right database for the project.” 


Other components

Depending on the case, we can use other components from the Cloud provider. For example, a message broker (Amazon SQS or Kafka), achieves the necessary functionality by implementing the existing solutions.

Back-End Sub-Systems to Develop

In practice, a payment gateway development company works with many microservices and subcomponents, placed on different servers and having different databases. Each microservice may have the same, similar, or entirely different tech stack. Depending on the size of the project, the number of microservices may vary from 5 to 100+, and some of them are common for projects in other industries like logging, error handling, and auditing modules. Let’s focus on the vital back-end sub-systems in our case:

Transaction processing

This is the heart of a custom payment gateway solution, and it involves integrating external payment processing services. According to business demands and geography, there is a demand to integrate multiple established payment processors. 

The implementation of each processor into your solution involves the following steps:

  • Register for an account with the chosen payment processor and obtain the necessary API credentials (API keys, merchant IDs, and other authentication details).
  • Code an integration layer within your custom payment gateway, to handle various payment-related operations (payment requests, authorization responses, transactions, and settlements). Java programming language is the technology of choice for this task, here in SPD Technology, and for this industry, since it has cross-platform functionality, a high-security level, and many available libraries. Programming on Java also allows reusing developed components on Android-based Point-of-Sale terminals. What’s more, you are welcome to leverage our Java development services and our top-skilled programmers would be glad to unlock the full potential of this technology for your project! 
  • Before deploying the integrated solution in a production environment, each integration should be tested and meet the certification standards of a respective payment processor. 
Volodymyr Soska: Software Development Engineer at SPD Technology

Volodymyr Soska

Software Development Engineer at SPD Technology

“Certification is the most time-consuming part of the third-party payment processor integration. While the actual technical integration may be completed within a month, getting the right to use it may take a couple of months, depending on the provider and its regulations.” 

Risk Management and Fraud Detection

There are different layers to this. It all starts with Know Your Customer and Know Your Business processes for each transaction. To evaluate businesses and customers, it makes sense to use both internally developed tools and integrate third-party solutions like Google reCAPTCHA for customer evaluation.

The vendor usually develops a Fraud Detection module with a certain business logic. As for Fraud Detection tools, they are complex technological solutions leveraging cutting-edge Artificial Intelligence and Machine Learning technologies. While the software development vendors can offer custom Fraud Detection functionality, it is more common and cost-effective to use third-party integrations for this purpose like Cybersource from Visa, for example. 


A well-built reporting module is crucial for payment gateway administrators, merchants, and stakeholders to gain insights into the performance and health of the payment system. The specific features and functionalities, as well as tech stacks, may vary based on the requirements of the payment gateway and the needs of its users.


There are two entirely different types of pricing we should deal with:

  • On the level of transactions and fees of payment processors.
  • On the business level for the users of your payment gateway.

Each one requires a separate module to cover its functionality. Additionally, in some cases, a separate module with a logic for tax calculation may also be required. 

Security Features

This is a complex topic, as on different levels, security requires different implementations. It is safe to say that the vendor is mostly responsible for the correct reception and encryption of data, while other aspects are usually covered by the Cloud provider and third-party integrations. Here is a quick overview of the most common techniques: 

2-factor authentication

In a custom payment gateway, 2FA can be implemented to add an extra layer of security during login, administrative access, or access to any sensitive operation. 2FA adds a layer of authentication to protect access to the payment gateway’s administrative interfaces.


This technique involves substituting sensitive data such as credit card numbers with a unique identifier or token. Instead of storing actual credit card numbers, tokens are stored and processed, reducing the risk associated with handling sensitive information. 

Encryption (SSL, TLS)

SSL and its successor, TLS, are cryptographic protocols that encrypt data during transmission, ensuring that sensitive information exchanged between the user and the payment gateway remains secure.

Read our expert article to get a deeper insight into ensuring payment gateway security!

Quality Assurance and Testing

A major scope of work is related to making sure that the system will work properly with timely resolution of any occurring issues. 

In the context of custom payment gateways:

  • Unit Testing is similar to any other software development project.
  • Integration Testing requires much more effort since we have plenty of different complex integrations to work with and test cases to cover. 

As our fintech software developers shared from their experience, sandbox accounts for integrated payment processors are not always stable, resulting in failing integrated testing on the side of software developers. The development company should work in cohesion with a third-party vendor’s support service to work this out.

Ensuring Compliance

While discussing how to create a payment gateway, it is impossible to ignore the most important cybersecurity standards and regulations.

Payment gateway compliance


A set of security standards designed to ensure that all companies that accept, process, store, or transmit credit card information maintain a secure environment. Developed by the Payment Card Industry Security Standards Council (PCI SSC), PCI DSS compliance requirements cover network security, access control, regular monitoring, and other measures to protect cardholder data.

Make sure your business is PCI-compliant following our PCI DSS compliance checklist for 2024!

Anti-Money Laundering (AML)

This is a set of regulations, policies, and procedures implemented by financial institutions and other entities to prevent and detect activities associated with money laundering and terrorism financing. AML regulations are designed to ensure that businesses have robust processes in place to identify and report suspicious transactions.

EMV 3-D Secure (3DS)

A security protocol is used to add a layer of authentication for online credit card transactions. It is an extension of the EMV (Europay, MasterCard, Visa) standard used for chip card transactions. 3DS prompts users to enter a one-time password or other authentication credentials during online purchases.


A set of security requirements established by the Payment Card Industry Security Standards Council (PCI SSC) for software vendors that develop payment applications. The standard aims to ensure that payment applications properly secure sensitive payment data and do not introduce vulnerabilities that could be exploited.


A security standard that involves encrypting payment card data at the point of capture (e.g., at a Point-of-Sale terminal) and maintaining that encryption until the data reaches the secure environment of the payment processor. This helps protect sensitive cardholder information from being intercepted and compromised during transit.

Deployment, Support, and Maintenance 

The deployment process is similar to any other software development project. However, with a custom payment gateway, a big project, there can be a need to support many servers, so having a dedicated DevOps team for maintenance and supporting security patches is a must-have.  

Payment Gateway Development Challenges

While any project may have its tough areas, there are a few specific challenges we encounter and overcome regularly while working on our Fintech projects, like our partnership with BlackHawk Network Inc. (BHN).  

Timely Maintenance of Many Integrations with Payment Processors 

As the business grows and expands its functionality to new countries, more integrations with payment processors are required. The more payment processors are being added to the gateway, the harder it gets to maintain their functioning. 

Volodymyr Soska: Software Development Engineer, SPD Technology

Volodymyr Soska

Software Development Engineer, SPD Technology

“Every payment processor integration should be up-to-date, as any third-party vendor can make changes anytime, causing disruptions in the existing integrations. Dealing with this often does not involve actual coding, but rather communication with a support team of a particular payment processor vendor and resolving issues together. Having dozens of payment processors integrated may turn this into a serious problem, requiring much attention.

Maintaining High Reliability

The maintenance team is responsible for ensuring 99.9% availability of the service, and quickly resolving any issues that might occur and negatively affect the performance. Any performance issues will harm the core business functionality, and the whole point of having a custom solution will be lost.

Volodymyr Soska: Software Development Engineer, SPD Technology

Volodymyr Soska

Software Development Engineer, SPD Technology

“Our team that works on supporting a custom payment gateway for one of our major clients, at SPD Technology, has a detailed roadmap with basic instructions on what to check if any anomaly happens in the system. It is super important for maintenance experts to know what to do and how to react in case any problem occurs because minutes of technical-related downtime can cost our client millions of dollars.”

How Much Time Does It Take to Build a Payment Gateway of High Quality?

The payment gateway development timeline is a crucial aspect that businesses need to factor into their strategic planning. On average, it takes approximately 8 months to construct a Minimum Viable Product (MVP) for a single currency, self-hosted payment gateway for basic eCommerce usage. This duration of custom payment gateway development encompasses building such modules as designing a payment page,  business and payment services development, basic admin and merchant portals development, plus billing and fraud detection services integrations.

How Much Does It Cost to Build a Payment Gateway? 

Discover a brick-by-brick estimate in our dedicated guide!

The complexity of the payment gateway solution and the time to develop more advanced functionality, is further heightened when considering the need for customization. For example, adding more currencies, integrating with new payment methods and payment processing systems will extend the time frame to build your own payment gateway. While the 8-months time frame for a custom payment gateway MVP development serves as a baseline, you still should approach this venture with a strategic mindset, understanding that customization, integration with reliable payment service providers and adaptability are key to meeting the evolving needs of the digital payment ecosystem.


Hopefully, this article sheds some light on how to develop a payment gateway system covering your unique business needs, improving your functionality, and saving you money as a result. It is important to note that depending on the type of your business, whether it’s a payment gateway for in-store or online business, the required components will differ, as well as the optimal tech stack for the project. So, it makes sense to consult an experienced payment gateway development company in this niche, before making any significant decisions. 


  • How to build a payment gateway like Stripe?

    This process includes multiple steps like:

    • Business analysis
    • Developing payment gateway infrastructure
    • Integrating payment processors
    • Developing custom functionality
    • Building a CRM system
    • Implementing security features
    • Obtaining certifications.