The global payments market continues to grow at double-digit rates. According to McKinsey, global payments revenue reached USD 2.2 trillion in 2023, with digital payments being the main growth driver. Companies entering this field have the opportunity to build strong businesses, but launching a payment processing company from scratch requires a careful balance of regulation, technology, and market positioning.
This guide outlines the practical steps and decisions involved in starting a payment processing business.
Step 1. Understand the payment processing landscape
Payment processing companies act as intermediaries between merchants, clients, banks, and card networks. Their role is to ensure that transactions are:
- Authorised – verifying that a customer has sufficient funds or credit.
- Captured – securely transferring funds through payment rails.
- Settled – moving money to the merchant’s account.
Business models differ. Some providers focus on online payments only, while others offer full-service solutions, including in-store acceptance, multi-currency support, recurring billing, and fraud protection.
Step 2. Choose your business model
Decide what type of processor you want to become:
- Payment Service Provider (PSP): provides merchants with a single account to accept payments.
- Payment Facilitator (PayFac): aggregates multiple sub-merchants under its umbrella, offering faster onboarding.
- Independent Sales Organisation (ISO): partners with acquiring banks to distribute services.
- Acquiring Processor: builds direct connections with card networks (Visa, Mastercard, UnionPay).
Your choice affects licensing, compliance requirements, and the size of your initial investment.
Step 3. Secure regulatory and compliance approval
Payments is one of the most heavily regulated industries. Expect to handle:
- Licensing: Payment Institution (PI) or Electronic Money Institution (EMI) licence in the EU, Money Service Business (MSB) in the US, or equivalent local permits.
- Compliance standards: PCI DSS Level 1 for card data protection, ISO 27001 for information security, and GDPR for data privacy.
- Anti-fraud and AML tools: transaction monitoring, suspicious activity reporting, and identity verification.
Working with compliance advisors from the beginning saves time and reduces the risk of costly regulatory setbacks.
Step 4. Build the technological foundation
Technology is the heart of a payment processing company. The essential components include:
- Core processing engine: ledger-based, capable of handling authorisations, captures, refunds, and settlements.
- Payment gateway: API that securely transmits transaction data between merchants, clients, and networks.
- Merchant onboarding and KYC: tools to onboard merchants quickly while meeting compliance requirements.
- Back-office tools: reconciliation, dispute handling, risk monitoring, and reporting.
- Omnichannel interfaces: web, mobile, and point-of-sale connectivity.
Here you face two paths:
- Build in-house: offers maximum control but requires years of development and substantial resources.
- Use a white label banking platform: dramatically reduces time-to-market, with pre-built modules and APIs.
Most new players start with an existing platform to launch quickly, then customise as they grow.
Build vs Buy: a closer look
| Factor | Build in-house | Buy a ready-made platform |
| Time-to-market | 2–3 years | A few months |
| Investment | Millions upfront | Predictable SaaS or licence fees |
| Customisation | Unlimited | High with source code, moderate with SaaS |
| Risk | High (delays, overruns) | Lower, proven core already tested |
| Focus | Engineering-heavy | Business development-focused |
A critical detail: some platforms only provide SaaS. This may be sufficient for smaller PSPs, but larger companies with expansion plans should seek providers that also offer a source code licence. This ensures long-term independence, full customisation, and no vendor lock-in. SDK.finance, for example, offers both models, giving payment companies the option to start fast with SaaS and later scale with full code ownership.
Step 5. Integrate key services
Beyond basic transaction handling, processors need to integrate additional services:
- Card issuing (Visa, Mastercard).
- Alternative payment methods (PayPal, Apple Pay, local wallets).
- Currency conversion and FX management.
- Fraud detection powered by machine learning.
- Value-added merchant tools such as analytics and invoicing.
These integrations increase revenue opportunities and improve merchant stickiness.
Step 6. Prioritise merchant and client experience
Merchants expect smooth onboarding, transparent fees, and reliable reporting. Key features include:
- Fast merchant approval via automated KYC/KYB.
- Detailed dashboards for monitoring transactions and settlements.
- Flexible settlement cycles (daily, weekly, on demand).
- Responsive support for chargebacks, disputes, and fraud cases.
For end-clients, speed and reliability matter most. Transactions should be processed in seconds with clear confirmation.
Step 7. Scale and expand
After the initial launch, scaling involves:
- Expanding payment method coverage to new geographies.
- Strengthening compliance in multiple jurisdictions.
- Investing in high-availability infrastructure capable of handling thousands of transactions per second.
- Developing partnerships with acquirers, fintechs, and marketplaces.
Continuous innovation is essential, as competition in payments is intense and margins are thin.
Final thoughts
Launching a payment processing company requires navigating regulation, securing the right partnerships, and investing in strong technology. While building everything from scratch is possible, most companies accelerate their market entry with white-label end-to-end platforms, combining fast launch with future scalability.