top of page

Payment Gateways - The New Control Layer of Commerce

  • 9 hours ago
  • 2 min read

Today we can pick from multiple payment providers, neobanks and payment methods. But how safe are they to hold our funds? Or how do they even work?

Many merchants believe they diversified their payment setup because they integrated several gateways or payment providers. This could not be further from the truth: in reality, many of these providers route transactions through the same acquiring banks, sponsor institutions or infrastructure providers behind the scenes, without full disclosure to the merchant.

Also, merchants usually only check the visible gateway fees while missing the hidden structure underneath the transaction flow. The total cost of a payment processing can be more expensive than taxes: a usual charge includes a gateway fee, acquiring fees, FX spreads, DCC margins, settlement fees, scheme charges, refund and chargeback fees, fixed transaction fees and deposits like rolling reserve. 

In many cases, gateways also act as introducers to acquirers and financial institutions, bringing merchants into the acquiring relationship in exchange for a share of the processing revenue.


But launching a payment gateway can be surprisingly easy compared to the level of responsibility these companies eventually control. A basic setup starts from around USD 5,000 with relatively low monthly operating costs, coming with pre-integrated partners and ready-made infrastructure which allows these new “tech companies” to accept merchants within days.


If something goes wrong with the underlying white label provider or with the newly formed “ad-hoc” gateways, large numbers of businesses can lose access to payment acceptance, settlements, and customer revenue at the same time without even understanding what happened.


This is why education in payments, banking, and payment infrastructure is critical. Companies are sold payment gateways only on the benefits, but without understanding the bigger picture, they underestimate the strategic, operational, and financial responsibilities attached to them. But who is to blame? The people who manage payment and banking tasks are not adequately trained to do so. Key areas, such as how payments and banking affect technology, UX, compliance, and other essential aspects of a business, are absent from accounting, economics courses, and MBAs.


 
 
bottom of page