How Much Does Payment Gateway Development Cost in 2024?

The global payment gateway market is booming, surging from US$32 billion in 2023 to over US$37 billion in 2024 (a 17% increase). This rapid growth highlights the increasing importance of secure online transactions for businesses of all sizes.

In our recent articles, we covered the benefits and step-by-step process of building a payment gateway; now, it’s time we move further and find out how much exactly the payment gateway development costs and the key factors that influence the final price tag.

This article is your guide if you're considering building a payment gateway for your business and want a clear understanding of the associated investment.

What is a Payment Gateway?

A payment gateway is a “middleman” between customers and retailers. It’s a digital solution that allows online transactions by securely depositing money in the merchant account and sending sensitive client data to payment processing partners.

Additionally, a payment gateway integration handles data transmission. Initially, it confirms that enough money is in the customer’s card or digital wallet. Or other payment mechanism to support the transaction.

Then, it uses encryption technology to protect private data that is managed inside the system. Finally, a payment gateway protects retailers from potential fraud.

These online payment systems usually include chargeback and fraud protection mechanisms to safeguard customers from losing money.

Why is it Important to Create a Payment Gateway?

The COVID-19 epidemic has substantially impacted all businesses over the past few years.

The shift in purchasing habits from traditional shopping to online shopping, or mainly utilizing digital payment instead of cash payment, as people spend more time at home and avoid direct engagement with others, creates a significant boom for eCommerce or online selling platforms.

There is a high demand for e-commerce platforms with secure payment gateways and UPI app development services.

As India's e-commerce market is predicted to reach INR 4,416.68 billion in 2024, growing at an annual rate of 11.45% to INR 7,591.94 billion by 2029, the adoption of digital payment trends will result in a substantial shift in business models.

To enter this massive market, businesses need to consider payment gateway development costs and create a payment gateway that allows them to take online payments securely and effectively while expanding their consumer base.

Moreover, building a payment gateway has several advantages. For example, when using a third-party payment gateway, such as PayPal, you pay a fee for each transaction, which can add up to a significant amount over thousands of transactions.

On the other hand, when you build a payment gateway system, you only have to invest once and will never have to pay for payment services again.

By choosing payment gateway development, you can gain a substantial competitive advantage by providing a seamless and secure payment experience that encourages customers to return to your website and e-commerce app.

Recommended Read: How to Choose the Best E-commerce Website Development Agency

Important Features of Payment Gateway Development

Before we delve into the payment gateway development cost, let’s have a look at some must-have security and functional features of payment gateway that you need to consider:

Security Features

Encryption:

One of the essential features of a payment gateway is encryption, which ensures the security of data transmission between the buyer, business, and banks, protecting sensitive information, such as credit card numbers, from unauthorized access.

Tokenization:

Tokenization replaces sensitive data with unique identifying symbols (tokens) that retain all relevant information while maintaining security. This lowers the danger of data breaches and theft.

Fraud Detection and Prevention:

The payment gateway employs numerous tools and approaches to detect and prevent fraudulent activity. This includes monitoring for anomalous transaction trends, authenticating the customer's identification, and installing security measures like CAPTCHA or two-factor authentication.

Authorization:

The gateway checks each transaction with the issuing bank or card network to guarantee sufficient money and accurate payment information. This phase determines if the transaction should proceed.

PCI DSS Compliance:

Payment gateways must follow the Payment Card Industry Data Security Standard (PCI DSS) to make sure the secure handling of cardholder information.

Functional Features

API Integration:

Payment gateways provide application programming interfaces (APIs) for easy integration with different e-commerce platforms, enabling businesses to customize the payment process to fit their website design and user experience.

Reporting and Analytics:

Advanced reporting and analytics functionalities help businesses to track transactions, understand payment patterns, and make informed business decisions. However, it’s important to note that this feature can increase the overall payment gateway development cost and time.

Customer Support:

The solid customer support feature in the payment gateway helps businesses and customers address any issues they may face during the payment process.

Multiple Payment Methods:

Payment gateways usually support multiple payment methods including credit cards, debit cards, bank transfers, UPI payments, and digital wallets.

Mobile Responsiveness:

As more and more people use their smartphones to make payments online, selecting a payment gateway that supports mobile devices and allows customers to make payments from any device will help improve the user experience on your website.

Multi-Currency Support:

For businesses that want to expand their reach outside the country, offering support for multiple currencies is essential. This feature will allow customers from different countries to pay readily without worrying about exchange rate fluctuations or other factors. It can also help increase the business revenue stream by tapping into more markets.

If you don’t know the process of payment gateway development in 2024, then you must read: How to Create a Payment Gateway

Payment Gateway Development Cost

Now that you understand why creating a payment gateway is important and what features you should include in your payment gateway, let's get into our primary topic: payment gateway building expenses.

Building a gateway for your website or mobile application may cost a variety of sums, based on the features and functionalities chosen. In terms of the minimum viable product, the cost of developing a payment gateway often ranges between $150,000 and $250,000.

The cost of creating a payment gateway is determined by a number of criteria, including the size and ability of the development team, the chosen technology stack, security and compliance measures, and business requirements for customization, maintenance, and support.

Here's a summary of the cost-effective elements involved in developing a payment system.

1. Research and Development (R&D):

Early R&D, just like generative AI in drug discovery, helps organizations grasp market requirements, regulatory standards, and the most recent payment processing technologies. This step includes payment gateway fees for market study, feasibility studies, and technological research.

2. Compliance and Security:

Compliance with industry standards, such as PCI DSS, necessitates thorough assessments, audits, and certifications, which can be costly. Implementing modern security measures, such as encryption, tokenization, and fraud detection systems, also requires significant spending.

Related Read: How ECM Software Enhances Document Security and Compliance

Software Development:

The payment gateway's core development comprises various areas, including software design, coding, and testing, as well as API integration and user interfaces for both businesses and users. This approach required the hiring of a group of professional developers.

3. Hardware and Infrastructure:

To manage transaction processing, a payment gateway must be built with a dependable and scalable IT infrastructure that includes servers, data centers, and a secure network. The infrastructure must be scalable to handle peak loads and maintain uptime.

4. Integration with Banks and Payment Networks:

Connectivity with banks and payment networks is another factor that affects the cost of developing a payment gateway. Payment gateways must be able to link to banks, credit card networks, and other financial organizations. This entails negotiations, collaboration agreements, and technical integration, which can be expensive and time-consuming.

5. Testing and Quality Assurance:

Comprehensive testing ensures that the payment gateway is reliable, secure, and efficient. This includes functional, security, and performance testing, all of which add to the payment gateway development cost.

6. Marketing and Sales:

To build a large customer base, good marketing and sales methods are required, which include promotional materials, sales teams, and payment-related partnerships or alliances.

7. Customer Support:

A payment gateway should offer 24-hour customer service to resolve any issues that businesses or their customers may have. This entails establishing a support team, training employees, and installing customer service tools and systems.

8. Ongoing Maintenance and Updates:

Online monitoring, upgrading, and maintenance ensure that the gateway is safe, compliant, and keeps up with changing industry trends and client expectations.

9. Legal and Administrative Tasks:

Contract creation, legal compliance, and company operations management are all needed gateway development processes that have an impact on overall costs.

Interesting Read: How Much Does E-commerce App Development Cost?

Payment Gateway Maintenance and Support Cost

When you establish your own payment gateway, you also incur significant long-term maintenance and support expenses. Here are a few factors that influence these costs:

Regular compliance updates: Keeping up with growing standards, such as PCI DSS, requires continual effort and spending. To ensure that you meet the most recent security policies and regulations, you must upgrade your systems on a regular basis.

Infrastructure maintenance: Maintaining and upgrading servers in order to maintain high availability, scalability, and security might result in significant payment gateway development costs.

Fraud prevention: Fraud detection techniques must be updated and enhanced to cope with new fraud patterns.

Technical support: You'll need a dedicated team to handle technical difficulties, implement enhancements, and integrate systems.

Staff training: In order to stay current on payment security processes and technology, employees will need to get regular training.

Also Read: Shopify App Development Benefits for E-Commerce

In-house Payment Gateway Development Vs. Outsourcing

There are many factors to consider when deciding whether to design a payment gateway in-house or outsource it.

For example, in-house development may be a preferable option for initiatives that are critical to the company's business strategy or require long-term support, but outsourcing is often better suited for short-term projects or businesses that require access to specialized talents.

The primary considerations for creating in-house versus outsourcing are listed below.

In-house Development

Project Control: In-house development offers complete control over the project. This ensures that the final product is closely aligned with the company's culture and that company data stays protected​​.

Long-term Support: An in-house development team is ideal for applications that require ongoing maintenance or involve sensitive information, as outsourced projects will have varying levels of long-term support.

High Costs: The main downside of in-house software development for payment gateways is the high cost of hiring, training, and keeping a dedicated staff.

Scalability Challenges: Scalability issues might arise with in-house development, so quickly growing the workforce to meet project objectives may not be practical.

Employee Turnover: High personnel turnover might disrupt in-house development and increase costs.

Outsourcing Development

Project Control: Outsourcing could result in communication issues or a loss of direct control over the development process.

Cost-effectiveness: Outsourcing typically results in cheaper expenses due to competitive pricing in locations with lower labor costs.

Global Talent Pool: Outsourcing gives you access to a vast range of experts with various talents and backgrounds.

Flexibility and Scalability: Outsourcing allows you to scale the team up or down according to project needs.

Faster Project Completion: Outsourced fintech app development teams are already assembled and experienced, which could lead to faster project execution and reduced payment gateway development costs.

How Arramton Can Build a Budget-Friendly Payment Gateway For You

A payment gateway enables businesses to easily take payments online from their clients; yet, developing a payment gateway involves technical competence and business information to be effective.

Arramton, an established FinTech software development company with nearly five years of expertise, has assisted thousands of businesses in leveraging their digital potential through a variety of FinTech solutions.

From developing a secure UPI Payment App to integrating a payment gateway, our team has the technical expertise and experience to design a solution that meets your company's requirements and budget.

If you need a payment gateway, our team would be happy to assist you. Contact us today.

Frequently Asked Questions

Q. How much does it cost to build a payment gateway?

Ans. The cost of building a payment gateway can vary depending on several factors, including:

• Complexity: A basic gateway with core functionalities will be less expensive than a highly customized solution with advanced features.
• Development approach: In-house development tends to be more expensive than outsourcing due to recruitment, training, and ongoing team maintenance costs.
• Security measures: Implementing robust security protocols adds to the overall development cost.

A rough estimate suggests a Minimum Viable Product (MVP) for a payment gateway can range from $150,000 to $250,000.

Q. What are payment gateway fees?

Ans. Payment gateways typically charge fees per transaction. These fees can vary depending on the gateway provider, transaction type (credit card vs. debit card), and processing volume.  There may also be additional fees for setup, PCI compliance, and monthly maintenance.

Q. How much time does it take to build a payment gateway?

Ans. The development timeline for a payment gateway depends on its complexity. Building a basic MVP could take several weeks to months, while a highly customized solution with advanced features might require up to a year or more.

Q. Which programming language is used to build a payment gateway?

Ans. Several programming languages are suitable for payment gateway development, depending on the chosen technology stack. Popular options include Java, Python, and PHP.