Difference between Traditional and White-Label Payment Processing?

With the growing popularity of online shopping and cross-border e-commerce, there is an increasing demand for payment processing. When faced with the requirement to process all of their payments through an online payment gateway, online merchants are constantly on the lookout for better solutions. With the introduction of white-label payment processing, an alternative to the traditional payment flow, the market landscape has recently changed dramatically. And in this article, we'll look at both of these processing models, weigh their benefits and drawbacks, and help you decide which one is best for your company.

But first, let's define the term "payment processing."

What is payment processing?

Payment processing, in its most basic form, is a process or payment flow that occurs immediately after the customer clicks "Pay Now." Thus, the primary goal of payment processing is to facilitate all of the steps required to authenticate and verify a transaction before transferring funds from the customer's account to the merchant's account.

A customer, a payment processor, a merchant (or a business owner), a payment system, and issuing and acquiring bank, and a credit card company are among the parties involved in online payment processing.

A merchant can receive transactions on their website in three ways:

• Your own payment gateway

• Gateway for third-party payments (with redirections)

• A white-label payment gateway

Let's take a closer look at each of these options.

How to create your own payment gateway

Creating your own payment gateway requires the most resources and time of any of these options. It all starts with assembling a team of payment technology experts to create and, ultimately, maintain your payment gateway. Then, if you decide to expand your business, you must obtain a license, establish business relationships with banks, and integrate a variety of payment methods to meet the needs of your existing and potential clients.

Overall, developing your own payment gateway will take months of active development and will later consume a significant portion of your budget in continuous upgrades, technical support, bug fixing, and general system maintenance.

This is a viable option for large corporations that can afford an in-house expert team to handle the technical aspects of the best payment gateway. However, if you are a smaller company or simply do not want to take the risk, you may want to consider one of the following alternatives.

You might be interested in the most effective payment processing software for online businesses.

What is traditional payment processing?

When a merchant integrates a third-party payment gateway into his system, traditional payment processing occurs. As a result, the system redirects the customer to a payment page hosted by the processor.

According to studies, redirections frequently confuse users, causing a large number of them to abandon the cart. The reason is a lack of trust. If the customer did his research and read the reviews, he may trust you as a merchant. However, if the payment page to which he is redirected is owned and operated by a third party with whom he is unfamiliar, the user may become frustrated and discouraged.

That is why choosing a payment gateway that you can embed into your website or fully brand in accordance with your company's style guidelines can help you capture more revenue by keeping a larger share of your clients on your site. This payment processing method is known as "white-label payment processing."

What’s white-label payment processing?

White-label payment processing is a method of processing transactions that uses third-party payment technology that is fully branded in accordance with your company's brand identity guidelines. As a merchant, you will be able to sell payment technology that has been developed and supported by an external team of payment experts. In the meantime, your customers will regard the system as theirs. It will include your company's logo, colors, and other corporate-style elements.

It's written right there in the name. Consider purchasing a product with a blank white space in place of the manufacturer's logo. You can put your logo on it and sell it as your own. You receive credit for a job well done, and you are relieved of the burden of maintaining the software, expanding the feature set, and implementing new industry-specific changes and upgrades. 

White-label payment processing is ideal for small and medium-sized businesses with multiple payment channels, as well as payment processors looking to consolidate their payment data into a single platform.

How to choose the best option for your business

Payment processing can eat up a significant portion of your budget if not chosen wisely. As a result, we recommend doing your homework before making a decision.

Identify the type of processing you need

Examine the size of your client base, the average monthly sales volume, and the rate of market growth. As a result, if you run a seven-figure business, creating your own online payment gateway India may be an option. You'll save money on commissions and be able to manage all of your company's transactions from within. It will be quicker and more efficient.

However, if you're just getting started, consider outsourcing your payment processing to a third party or even going completely white-label. The latter option assists you in converting more customers.

Compare available software providers

Don't make a decision under duress. With the growing popularity of online shopping, the payment processing market is expanding at a rapid pace. As a result, you have a lot of options. And it's all too easy to fall victim to good marketing for a subpar product. So, in order to avoid this, look into:

Reviews

Look for case studies and genuine reviews on reputable platforms. Keep your eyes peeled. Alternatively, inquire about a provider of your choice.

Rates

It's a no-brainer. Rates will differ based on your industry, product, and sales volume. However, there is always wiggle room in pricing, no matter what your business is. So, look around before making a decision.

Flexibility

Can the provider tailor the platform to your company's specific requirements? Are they prepared to accept new payment methods that your target audience prefers? Is technical support quick to respond and resolve issues? These are all critical issues. Time is a valuable commodity. It literally is in your case. As a result, the system must be flawless.

Payment methods

Is the software compatible with all of the payment methods you require? If not, how long will it take to get them up and running?

Features

The features you require are determined by the nature of your business. As a result, if you run a high-risk business, you should look for intelligent routing, cascading, and cutting-edge fraud and chargeback prevention systems. Low-risk businesses, on the other hand, should consider outsourcing their payments to a provider that offers affordable recurring billing, a flexible fee structure, and a fee calendar.

These are general guidelines to help you select the best payment processor for your company. The list of requirements will change on a case-by-case basis.