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How To Start A Payment Processing Company

How To Start A Payment Processing Company

If you’re considering how to start a payment processing company, this is a useful article to read. We outline the options and why the white label is most likely the best, most profitable, and cost-effective route for your business.


Payment processing is a lucrative, high-growth, and profitable business. Every business needs a payment processing provider, whether they sell online or in local shops. In this article, we take a closer look at how to start a payment processing company.

Over the last few years, the payment processing sector has grown fast. With more customers now than ever before buying goods, services, and subscriptions online, it’s set for even faster growth in years to come. It will exceed a CAGR of 19.4% between now and 2028.

What is a Payment Processing Company?

Payment processors make the world go round.

A payment processing company or a payment processing provider manages, handles, and processes credit and debit card payments, bank transfers, open banking transactions, alternate payment methods, and payments from e-wallets and crypto wallets. Whether online or in stores, payment processors provide software (and in some cases, hardware) that enables customers to pay for goods and services.

Regardless of the currency or payment method or whether a transaction is online or offline at the Point of Sale, payment processors mediate between relevant banks and payment acquirers. Once payment has cleared, customers have bought the products/services they want.

Why Start a Payment Processing Company?

Payment processing is a LARGE business.

Even before the pandemic, some of the world’s largest FinTech (financial tech) companies were growing fast. And then, during the pandemic (the peak of it, between 2020 - 2021), e-commerce took off, surging forward with 3-5 years of growth in under 18 months.

Amazon, eBay, and other e-commerce giants grew faster than expected. But so did the surrounding ecosystem, including payments platforms like PayPal, Stripe, Adyen, and buy now pay later operators, such as Klarna.

Within this ecosystem are dozens of payment processing companies. During the pandemic, one of the market leaders, Stripe, tripled its valuation from $36 billion to $95bn. There were several major deals in this space too. Worldline bought Ingenico for $8.6bn, creating Europe’s largest payment processor. Numerous other mergers and acquisitions happened during the same period, a sign of a buoyant and fast-moving market.

Clearly, valuations and M&A activity on that scale signify that payment processing is a profitable and high-growth market with enormous potential. Expectations for the sector are high; growth is projected at a rate of a CAGR of 19.4% from 2021 to 2028. Done right, you could take your part in this huge and always growing business, as there’s still enormous upwards potential in this sector for new multi-billion companies.

What’s the Traditional Way of Building a Payment Processing Company?

There are two ways you can start and build a payment processing company.

The traditional way takes a lot of work, time, and money.

You could develop and build your own payment processing software. For this, expect to easily invest $100,000 to $250,000 simply to create a minimum viable product (MVP). Plus, you’ve got to obtain numerous financial licences and adhere to dozens of regulations. All of this is before you even start investing in marketing and sales to promote your new startup.

In a competitive market, you should have a sufficiently attractive and new offer to attract investment, and once the product is ready, customers. It’s not an easy journey and could take at least 12-18 months of development (if not more)—market research and planning a sales and marketing campaign before you can launch.

Still, even after spending a relatively large amount of time and funds, almost in 100% of cases, you’ll end up with a technology that isn’t competitive with the current market expectations for payments tech if your product it’s not super niche.

The benchmarks on this market are already set super high, client expectations are often complicated, and it’s hard to shift their choices in your favour. In addition to that, releasing an MVP would be only the beginning of tech-related challenges because maintenance and further development are no less important and expensive.

Instead of going that route, you could work with a white label partner. When you work with Spell, we provide a super affordable, modern SaaS platform with a unique differentiation strategy, which Spell Partner receives as a new Netflix series or music on Spotify - on a subscription basis free of fixed charges.

Is There a Better Way? Work with a White Label Payment Gateway Provider

A much better and more cost-effective alternative is going the white label route. You can start with almost no budget dedicated to technology, receiving the top-notch tools to start processing payments being technically in-line or even ahead of the competition within days, not years, and focus all resources on the main goal - winning the market share.

Working with a White Label Payment Processing Provider means buying and selling another company's software under your brand. The end-user, your customers, will only see your branding. You set the rates and terms. On every transaction, you make a profit, on top of the relevant payment processing fees charged by banks and card networks.

All you have to do is take care of customers and keep growing your business, while Spell takes care of maintaining and developing a complicated and secure SaaS platform.

We have developed market-leading, cutting-edge, and highly secure payment processing software for worldwide partners who want to offer payment processing solutions and win in the hyper-competitive payments business. You’ll also benefit from receiving constant updates and new features as part of our competitive market differentiation strategy and ongoing support.

Foundations of a Successful Payment Service Provider

From Spell’s extensive experience in the payments business, being successful in this market means building a solid foundation on these three pillars:

1) Access to the market: Partners have to pick the right niche and have some business experience to understand the local context, which enables them access to the market to make the first sales;

2) Competitive technology: You need to collaborate with payments tech partners who develop the most modern platform based on their experience in serving multiple payments businesses. With Spell, you will get an unfair advantage on the market both from meanings: from the product and commercial perspectives;

3) Right banking partnership: This is another hidden key, without which the business might be at a big risk even if the first two points are made right.

The partnership structure should cover the following points:

  • Payment facilitation model, which will help you get your clients to live independently and on time;
  • Onboarding SLA in case the banking partner will still require to verify each client on their before allowing them to go live with the first payments;
  • No fixed-rate contract based on revenue share conditions will prove the acquiring partner won’t block you from winning more significant deals on the market.

These are just some key points you must pay attention to starting or running the payments business. At Spell, we closely follow and consult our partners on many hidden details to help them mitigate financial risks and increase their probabilities for success.

What’s more, Spell is the white label payment gateway solution that will accelerate and grow your payments business by offering more payments tools — making it easier for you to generate more revenue, optimising operating costs, and giving customers a better user experience than they would get with any other payment gateway provider.

Use Spell to launch a platform on your domain to start or upgrade your payments within a day. Visa confirms that Spell is a PCI DSS Level 1 compliant platform built on a robust AWS infrastructure, with an outstanding 99.999% uptime.

Handle a Demo Tour, download the Spell Deck and accelerate your business with the best white label payment platform on the market! Let’s get Spelling!

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SIA Spell entered into agreement No. JU-L-2021/10 with Investment and Development Agency of Latvia for European Regional Development Fund project No. JU-PI-2021/18 - 1.2.1.2/16/I/001 to receive support for attracting highly qualified employees dedicated to developing new features of the SaaS PayTech platform, which will help our clients increase sales and efficiently scale operations and decrease project implementation costs.