The 5 Top Costs Of Becoming A Payment Service Provider

in Blog
on Tuesday, 28 July 2015 13:19

Becoming a payment service provider -- also called a payment facilitator or simple a PSP -- involves a number of significant costs. When you fully understand the costs involved, you can make better decisions and better understand if your company is in a position to start down this path.

Here are the top five costs involved in becoming a payment service provider:

1. Gateway Software License. $50,000 to $250,000.

Becoming a payment service provider means having your own payment gateway solution. You can white label a commercial open source software product or create your own software in house. Even if you create your own software -- an expensive and time-consuming proposition -- you may choose to buy some connectors or integrate with preexisting customer management products. If you choose to use existing payment gateway software, you can choose to license the software and host it yourself or use a hosted version that works on someone else’s servers.

2. Tokenization Appliance. $50,000 to $100,000.

You must have physical tokenization equipment and related logic, referred to together as a tokenization appliance. Tokenization protects sensitive cardholder data and reduces the PCI compliance burden. Sensitive data can’t be stolen if it doesn’t exist in a database and is instead replaced by a token. But the appliance to make this happen doesn’t come cheap. When considering the costs involved in being a payment service provider, you must take into consideration the cost of acquiring a tokenization appliance or service that does the same thing.

3. Annual PCI Audit. $25,000.

If you choose to self-host your payment gateway, you’ll be subject to an annual Payment Card Industry Data Security Standards audit at your own expense. The purpose of the audit is to make sure you’re doing everything possible to maintain the security of your cardholder data. Meeting the arduous requirements of the audit can be as difficult as the audit is expensive. Businesses must choose auditing companies from which to request quotes, and pricing can vary. Choosing a hosted server solution may take you out of the PCI loop, but it means paying hosting fees every month.

4. Monthly PCI Hosting Fees. $2,500 to $3,500.

Your payment gateway software must be installed on either your own server infrastructure or a PCI-compliant hosting solution. When you self-host, you must maintain a data center, development personnel and pay for the annual PCI audit. Instead, you may choose to host your software in a PCI-compliant hosting accounting, leaving the work and the audit requirements to the solution provider. Because of the costs and hassles of staying PCI compliant, these hosting solutions are considerably more expensive than similar non-compliant environments.

5. Integrations With Banks And Processors. $5,000 to $15,000 each.

Processing payments requires integration with credit card processors, banks and even other gateways. When you license software, integrations are part of the package. When you build your own payment gateway, you must pay to create the integrations you need, and you must often convince banks and especially credit card processors to integrate with your software. Even when you license software, integrations must be certified under your company’s name and PCI environment, and there’s an expense involved.

None of these costs are set in stone, but all of them are very real parts of becoming a payment services provider.

At PayVisors, we’re a business consulting company and can help you find the payment gateway software (such as you need and fill in other pieces of the payment processing puzzle. What can we do for you?

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