How to start your own payments company

By StarkPayments| Published on 07/06/2018
White Label Payment Software

Start your very own Payments Company

With our ever expanding digital world, and more and more entrepreneurs wanting to dip into online retail, starting a payments company will be an avenue that many will explore. Some will approach creating a payment processing service for their own business’, others will aim to create payment processing formats for existing companies to implement. Which ever way you are looking to go, there is plenty of potential for establishing a truly valuable venture. This is after all, a field that is more competitive then ever, a highly valuable industry that is only going to continue to grow. The rate it grows year on year has been, and likely will continue to, increase and expand at a fast pace. With this thought, the time is right to seriously consider looking into this particular option. Starting a payments company could be a real solid money maker for you, particularly if you manage to associate yourself with any major credit card names, as well as setting yourself up well with plenty of other clients projects.

If you are new to the idea, but are keen to gain some knowledge into where to start in what can perhaps seem a daunting prospect, hopefully this article can be of some help.

There is a good chance your first thought is to wonder how to break in to the payment processing industry. How did big names such as PayPal, Braintree Payments and Stripe end up where they now find themselves? It did not of course, take place over one night. Each of the small and larger payment processing companies have their own unique story.

Take for instance PayPal. This highly known company was established in 1998 (then called Confinity), where they developed security software for handheld devices. In 1999 they became the money transfer service we now know them as, but not yet under the name PayPal. In March of 2000 Confinity merged with, an online banking company founded by Elon Musk who held great belief in the prospect of the future success of the money transfer business they were creating. However Musk and the then president and CEO of Harris Fricker disagreed on this point leading Fricker to leave the company in May 2000. Musk decided that the company would terminate its banking operations except the PayPal money service. In this same month Elon Musk was replaced by Peter Thiel as ceo of, which was renamed PayPal in 2001, expanding fast throughout the year until company executives decided to take PayPal public in 2002. PayPal’s IPO was listed under the ticker PYPL at $13 per share and ended up generating over $61 million. Now in 2018, PayPal is implemented as the payment system for a large majority of online shops and services.

Like with every business journey you embark on, through market research is highly encouraged. Learn for instance how many retail businesses are in your area. You’ll likely want to target these companies first, and as soon as you have your solid format you can begin networking with them, advertising to businesses in your local area what you have to offer. Even if they already have a system in place that they have been running with without issues for some time, you have a shot to convince them of your USP. You may even decide to focus completely on your local area, potential client-wise. This can often be a very successful option. Bare in mind that when looking at geographic locations in the wider sense, certain countries often favour certain payment methods, so you’ll want to offer this as payment options for customers using your processing service.

It is a very good idea to make sure you are keeping an eye on any new payment options, as these will keep making their way in to the market, this is the nature of such a fast moving sector. If a payment option proves popular and takes off well with customers, you want to be offering it, right? Whatever area you are looking in to conquering, and payment options offering, there is a good chance that there will be some other payment processing companies about. Research what they do, what they sell to the customer, and what the costs are. Can you provide better deals? Can you perhaps take a unique angle that they do not offer clients to lure them in? Maybe you can produce stronger results through better advertising campaigns.

So, you have decided to start a payments company, and it is likely you will have realised to put together a business plan. When creating a business plan, you will need to decide how you are going to operate the business, the full services that you will offer (there are add on options that will flow well with a payment processing company), and of course what you will charge for your services. Decide how much capital you will require to start and operate the company and how you will obtain said capital. How will you market your new business? These points all need to be given plenty of thought. If you have a well put together business play it will also help your chances of obtaining a loan, should you need one for your start up, when taking your idea to the bank.

You could also look in to leasing companies to partner with. Where a leasing company could come in to play is it would help to generate business by helping cash-strapped small business owners finance their credit-card processing terminals, equipment and ATM. You could allow a customer to then have the choice of either leasing a terminal for a certain amount a month, or purchase it outright for a fixed amount, whatever your price is. The leasing company would then send you a check for the purchase price of the terminal, minus their leasing fee.

A recommended route for breaking in to payment processing is to form an ISO (Independent Sales Organisation). This will provide merchants the chance to sign up with your company, and then route their credit or debit card payments through your system. You will then be set up against your rival processors competing for business. And a competitive business it is, but stay strong, keep your format strong and well implemented, run tightly, advertised well, and offer great customer service and you will eventually stand a very good chance of reaping the rewards. Please note, if you are looking to go down the ISO path, you need to be prepared to make a capital outlay. If you hope to become a registered ISO with big hitters such as Visa/MasterCard, you will need to pay a fee of as much as $10,000 per year, and then $5,000 per year to continue your registered status. There Is also American Express as another option, their rates however are even higher. Having said that, its customer base are often more loyal and spend more per transaction. This would allow you to bring other ISOs under your licence. However, if you want to work under a registered ISOs license, or directly with a bank, you may not have to pay this fee.

Now a bit about how the system its self would typically operate. For every card that is run through your payment processing system you will receive a percentage of credit card volume which is in the form of a flat fee, for every PIN-based credit card transaction, and sometimes a further fee on the payment processing equipment itself. In terms of your earnings, remember the more transactions your payment company handles, the more money it will earn. If you are implementing your own payment processing service on your own online shop, you’ll in this respect feel the direct results of your shops sales as they come through you payment processing company.

Something else of note: you must have a Visa or Mastercard related bank to underwrite your transactions and handle the interbank routing process. In order to obtain this standard you’ll need to contact banks, which will likely involve meeting with management, to show them your business plan and convince them that your payment services could help create good relationships for the business’ in your chosen community.

If you are thinking of starting a payments company there is no better time! Sure competition is tighter in that there are so many more people doing the same thing, setting up their own payment processing services. But no two are ever exactly the same, and don’t forget their is also a large increase year on of people starting their own websites that will need a processing company such as your own. It could also be fairly argued that while no industry is bullet proof, this is an industry that is getting bigger and bigger, and is unlikely to be coming out of use any time soon, quite the opposite. So if you have your plan, go for it!

You may also want to consider Stark Payments as an option. We are a new payment company, who are focused on working with developers. If you are a web developer agency producing several e-commerce stores or apps for clients, instead of referring your clients to a third party payment provider such as PayPal or Stripe you will be able to provide payment processing services under your own brand! This will add value to you brand in multiple ways, not only will it offer alternatives to the big brand names that some people would rather not use, it adds a strong element to your company, what it has created and a larger package for customers to evaluate, as your brand and its capabilities has expanded. Stark Payments give our resellers hugely discounted transaction fees, anywhere between 10-15p per transaction, they will then be able to up-sell to their clients up to 20p per transaction. Benefits include helping you to retain client relationships, additional revenue stream, operate as an independent payment provide and be supported by a leading technology provider.

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