Businesses are increasingly looking for ways to differentiate themselves, streamline processes, and enhance the customer experience. One key area where these objectives intersect is payment processing.

According to a report by Polaris Market Research, the global payment processing solutions market was valued around $74 billion in 2021 and is expected to reach more than $192 billion by 2030. The size of the payment processing industry is a reflection of its business value and the diversity of needs that exist—it’s not the kind of function with a one-size-fits-all solution.

White-label payment gateways help businesses improve their payment experience and reshape the way they conduct online transactions. Below, we’ll explore this technology and provide insight into the advantages of white-label payment gateways. Here’s what you need to know.

What’s in this article?

• What is a payment gateway?
  
• How do payment gateways work?
  
• What is a white-label payment gateway?
  
• What types of businesses use white-label payment gateways?
  
• Benefits of using a white-label payment gateway
  
• Choosing a white-label payment gateway
  

What is a payment gateway?

A payment gateway is a technology businesses use to accept and process online payments. It acts as the bridge between a customer’s payment method—such as credit cards, digital wallets, or bank transfers—and a business’s merchant account, transferring funds quickly and securely.

Payment gateways help ensure the security of transactions by encrypting sensitive information, such as card numbers and personal details. And alongside other players in the payment process, they contribute to verifying transaction authenticity to prevent fraud. Payment gateways also help authorize transactions, communicating with card issuers to confirm that customers have sufficient funds to complete their purchases.

How do payment gateways work?

The process of how a payment gateway works involves several basic steps:

1. Initiation: The transaction is initiated when a customer decides to make a purchase and enters their payment information on the business’s website or app.
   
2. Encryption: Once the customer submits their payment details, the web browser encrypts this data, typically using SSL encryption, for secure transmission. This encrypted data is then sent to the business’s server and, in the case of online transactions, onward to the payment gateway.
   
3. Routing: The payment gateway sends the transaction information to the relevant payment processor, which then forwards it to the card issuer or the correct card network.
   
4. Authorization: The customer’s bank receives the authorization request, verifies the availability of funds in the customer’s account, checks for any potential fraudulent activity, and then sends a response back to the payment processor. This response is either an approval (if the funds are available and everything checks out) or a decline (if the funds are insufficient, the card is expired, etc.).
   
5. Order fulfillment: The payment gateway forwards the authorization to the business, which then fulfills the customer’s order. If the authorization is declined, the customer is informed of the unsuccessful transaction.
   
6. Settlement: The card issuer transfers the funds to the business’s account during a process known as “settlement,” and the transaction is complete.
   

What is a white-label payment gateway?

A white-label payment gateway is a fully developed payment gateway solution that businesses can customize to their requirements and rebrand as their own. This model allows companies to offer seamless, secure, customized payment solutions without developing the technology from the beginning, which can be costly, time-consuming, and fraught with technical challenges.

White-label payment gateways can support a wide array of payment methods, from credit and debit cards to digital wallets and bank transfers, giving businesses the flexibility to cater to the diverse preferences of their customer base. Additionally, these gateways can handle multiple currencies and languages, enabling businesses to expand their reach and access international markets.

What types of businesses use white-label payment gateways?

White-label payment gateways are a viable choice for various businesses, regardless of size or industry, particularly those looking to optimize their payment processes and enhance their brand presence. However, they are especially appealing to certain types of businesses, including:

• Ecommerce businesses
  For ecommerce businesses, creating a smooth, simple payment process is important. White-label payment gateways allow these businesses to integrate a fully functional payment gateway that carries their branding, helping to enhance user experience and boost trust and loyalty.

• Software-as-a-service (SaaS) providers
  SaaS providers often integrate payment gateways into their software to facilitate recurring transactions. With a white-label payment gateway, they can provide a frictionless, branded payment experience to their users.

• Banks and financial institutions
  These businesses may choose to use a white-label payment gateway to offer their customers a secure, reliable, and branded online payment solution, without needing to develop the technology in-house.

• Platforms and marketplaces
  Online platforms and marketplaces, where multiple vendors sell their products or services, can benefit greatly from white-label payment gateways. These platforms can use the gateway to process payments securely, disburse funds to vendors, and provide a consistent payment experience across all vendors.

• Startups and SMEs
  For startups and small- to medium-sized enterprises (SMEs) that lack the resources or technical expertise to develop a payment gateway from the beginning, white-label solutions offer a cost-effective and time-efficient alternative.

Benefits of using a white-label payment gateway

While many businesses feel satisfied with unbranded payment gateways, there are advantages to white-label gateways that hold strong appeal. These include:

Control and customization

By adopting a white-label payment gateway, businesses gain greater control over their payments infrastructure. This is not just about branding, although the ability to offer a payment solution under your brand name undoubtedly enhances brand consistency and trust. It’s also about tailoring the payment experience to the specific needs and preferences of your customers, as well as aligning it with your business operations and strategy.

For instance, you can customize the user interface to provide an easy and intuitive payment process, reduce friction, and increase conversion rates. You can also integrate the gateway with your business systems—such as CRM, ERP, and accounting software—to streamline operations and improve data visibility and accuracy.

Cost and time efficiency

Developing a payment gateway in-house is a complex and costly process that requires specialized technical expertise. Even after the gateway is up and running, there are ongoing costs and efforts associated with maintenance, updates, security, compliance, and support.

White-label payment gateways, on the other hand, come ready-made. You don’t need to invest resources into development, and you don’t need to worry about maintenance and updates—the provider takes care of these aspects. This enables you to focus on your core business activities and use your resources more effectively.

Security and compliance

Customers need to trust that their sensitive data is protected, and businesses need to comply with rules and regulations, such as PCI DSS, GDPR, and PSD2. These rules and regulations can often be complex and burdensome to comply with while building payments infrastructure, but compliance is necessary to avoid hefty fines and reputational damage.

White-label payment gateways are designed with security and compliance at their core. They employ advanced encryption technologies, fraud detection mechanisms, and other security features to safeguard customer data. They are also built to comply with industry standards and regulations, taking this burden off your shoulders.

Choosing a white-label payment gateway

White-label payment gateways can offer tremendous benefits for businesses that thoughtfully choose a solution that fits their needs and aligns with their goals. Businesses should consider several factors when deciding whether to use a white-label payment gateway.

Business needs and objectives

First, you need to evaluate your business needs and objectives. Ask questions such as:

• Which payment methods do your customers prefer?
  
• Which currencies and languages do you need to support?
  
• Do you plan to expand into new markets?
  
• How important is branding in your payment process?
  
• How do you envision your payment experience?
  

The answers to these questions will help you determine whether a white-label payment gateway is the right solution for your business—and if so, which features and capabilities you should look for.

Costs and benefits

Next, you should consider the costs and benefits. This is not just about comparing the costs of a white-label payment gateway with the costs of an in-house solution. It’s also about considering the benefits—such as enhanced customer experience, increased conversion rates, streamlined operations, improved data visibility, and reduced risk—and quantifying them in terms of revenue, savings, and strategic value.

Providers and products

Finally, you should research providers and products. There are many white-label payment gateway providers out there, each with their own strengths and weaknesses, product offerings, pricing models, and customer support policies. Look for a provider that:

• Aligns with your business requirements and goals
  
• Has a strong track record in the industry
  
• Offers a robust and flexible product
  
• Provides excellent customer support
  
• Is transparent and fair in its pricing
  

A streamlined, intuitive, and secure payments infrastructure is a baseline expectation of modern customers. White-label payment gateways offer businesses a way to deliver on these expectations, providing a fluid and customized payment experience, saving time and costs, enhancing security and compliance, and reinforcing brand identity.