Build vs. Buy Part 01: The Costs and Risks of Building a Payment Platform
Platforms need payment capabilities, so the conversation always turns to whether they should be building a payment platform of their own or investing in one already established.
There are numerous benefits attached to owning your own embedded payment solution. It opens up new revenue opportunities, it’s accessible to customers, which creates stickiness and engagement, it reduces friction for customers, and it allows for improved cash flow, expenditure, and processes. Embedded marketplace payment solutions are designed to streamline and modernise payments while reducing the admin burden and improving productivity.
In short, they are a trusted and agile step towards minimising payments friction while enhancing overall business performance.
The problem is – do you build your own solution, or do you invest in one that’s already been built?
It’s Not Just About the Technology
While there is little doubt that the technology is, of course, an integral and critical component of a capable and reliable embedded payments solution, there are multiple factors you need to consider before you start building a payment system and your own technology stack.
Anti-Money Laundering (AML)
This is an integral part of your embedded payment platform and overall compliance. It ensures your platform is capable of detecting and preventing financial fraud with technologies that can identify suspicious activity at speed.
Know Your Customer (KYC)
An essential part of payments and regulatory compliance, KYC verifies the identity of those accessing the payments system to mitigate money laundering, theft, fraud, and more. It is a mandatory part of a payments platform that needs to be as seamless as possible, or it runs the risk of frustrating customers and creating unnecessary friction.
You must ensure that your entire payments platform complies with PCI DSS. According to the PCI Security Standards Organisation, more than 10.9 billion records with sensitive information have been breached between 2005 and 2018, making security at the point of sale absolutely critical. PCI DSS compliance minimises the risks and vulnerabilities within payment systems while protecting the business and the customer.
You will need to adhere to all the licensing requirements within your region and in those where you plan to operate. It’s a lot of red tape and bureaucratic paperwork that takes time to resolve and costs money to complete. Your licences have to remain up to date, and you need to be compliant or run the risk of hefty fines and reputational damage.
This complex process takes the customer through every step of your payments platform until their KYC checks are complete, their data is updated and verified, and they are immersed within your ecosystem. Your users need training manuals and support, your system needs to be smooth and accessible, and your technology must deliver every step of the way. A well-designed customer onboarding process can make all the difference for your customers and your admin and compliance requirements.
Then we need to look at the costs:
To undertake the development of comprehensive onboarding, AML, KYC, licensing and PCI DSS compliance, alongside underwriting policies and bedding down regular compliance monitoring, you are looking at a price tag of $1 million and a timeline of a year.
Let’s break this down
To build a marketplace payment platform:
- Your onboarding system will cost you $500,000 and take a year
- Your underwriting policies will cost you $250,000 over a year
- Your ongoing AML and compliance monitoring will set you back $250,000
- Your licensing across PCI and compliance will cost you $900,000
Your next step is to tick several boxes that allow for your payments platform to engage on a global level. You must ensure that your platform has sponsorship, gateway integration, a merchant management system, and the ability to undertake reliable reporting and reconciliation.
When you build your online payment system, you must partner with various acquirers to ensure your payments are accepted and your system works properly. Because acquirers already have established relationships with card networks such as Mastercard and Visa, they make managing transactions and payments more manageable. They are also heavily regulated, compliant with the relevant laws and compliance mandates, and help you do better business.
Payment Gateway Integration
You will need a payment gateway architecture that’s intensely secure, highly agile, and capable of taking payments from multiple sources online. Your payment gateway’s capabilities will be the ultimate make or break for your payment platform – poorly designed with limited functionality will seriously inhibit your success.
Merchant Management System
This is the key that unlocks the door. The merchant management system uses the data provided by the payment gateway to give customers insight into payment and transaction data in real time. It provides all those using the system with receipts and proof of payment information critical for reconciliations, audits and more.
Reporting and Reconciliation
No payment platform is complete without a trusted, data-driven, high-end reporting and reconciliation functionality. This is where admin comes to rest and badly designed, limited visibility, or poor functionality will seriously impact your customers and your payment platform. Design your reporting and reconciliation with data in mind and capable of delivering insights on demand.
Then we need to look at the costs:
Undertaking the development of comprehensive global processing across each of these critical metrics will take you at least a year and cost you over $1 million.
Let’s break this down:
- Your acquirer sponsorship will cost you $500,000 and take a year
- Your payment gateway integration will cost you $100,000 and take around four months
- Your merchant management system and reporting and reconciliation development will cost you $800,000 and take a year
eWallet Management and Fraud Prevention
Your customers will need an eWallet functionality that allows them seamless access to funds and smooth management of payments and their business. They also want this wallet (and all the functionality of your embedded payment solution) to be underpinned by robust fraud prevention.
Your eWallet, or digital wallet, has to be capable of allowing customers to accept multiple payment methods. If it’s limited in its scope, customers won’t want it. After all, their customers demand ubiquity and flexibility, so they will demand this from your payments platform. Your eWallet has to be easy to use, secure, flexible in terms of payment method, and reliable. It includes tax automation and information, multi-vendor support and capability, and invoicing and needs to integrate across all aspects of the payment platform.
You need excellent fraud prevention built into your embedded payment solution alongside PCI DSS. This includes a rule management system that limits or prevents specific user behaviours based on set rules. These are based on best practices and industry-relevant rules that manage the risks on your platform across logins, transactions, and user actions. It is a critical part of compliance and a key source of insight into how your platform can improve access and fraud controls.
On top of all the other features in your embedded payment platform, you need to include the costs associated with providing and managing financial services. This covers lending, banking, and other services your customers expect from a comprehensive payments ecosystem.
Then we need to look at the costs:
To undertake the development of your fraud prevention and eWallet, you are looking at a bill of more than $4 million within a two-year time frame.
Let’s break this down:
- Your rule management system will take a year to develop and cost you $100,000
- Your eWallet management system with multi-vendor support will take two years to develop and cost you $2 million
- Financial services will cost you up to $2 million, dependent on the requirements
The Build Cost
If you build your own embedded payment platform, you are looking at a bill of up to $8 million with an ongoing charge of $3 million a year in maintenance, compliance and regulatory costs. It is an expensive endeavour that takes time and will continue to take up time in maintenance and admin.
There’s no point in building a payment platform when you can buy one
If you white-label an existing embedded payment solution, you skip building a secure payment system and all the costs and complexities that come with it. Yes, you will have to pay a fee for the use of the service, but the rest? That’s taken care of by UNIPaaS.
We provide you with a trusted and proven white-label embedded finance solution that has gained significant traction with leading brands such as IRIS and Chaser, and, with its extensive customisation capabilities, it is revolutionising the embedded payment experience for B2B platforms.
UNIPaaS is also PCI DSS Level 1 compliant, providing you with a high level of security, trust and compliance. This certification demonstrates that it is safe to conduct paymetns with credit and debit cards on UNIPaaS and assures our customers of solid performance and exceptional security.
Simplify the payment process with UNIPaaS
With its fully white-labelled, ready-too-use UI components for embedded finance, UNIPaaS simplifies the payment process and provides you with complete control and you can implement our components within weeks (six to eight weeks!) while enjoying all the benefits. From customisation through to support, security, transparency, easy integration and trusted service delivery, we simplify your service delivery and help you do more with and for your customers.
Our features can be customised to suit a broad range of industries and business types, and our proven service delivery, support, and security reassure you of uptime, functionality and safety. We are committed to reducing the risks, smoothing the road, and building a white-label embedded finance solution that fits your brand and your business perfectly. Quit building a payment platform. Find out more about buying one here.