How to Build an Online Payment System and Challenge PayPal
7 Sep 2017
While bitcoins and other cryptocurrencies are still a risky investment, the online payments market shows nothing but consistent growth. The turnover of e-wallets is 22% of the entire e-commerce market and will reportedly hit $668 billion by 2019. Fintech experts predict online payments to be more popular than transactions between credit and debit cards in just 2 years from now.
Payment systems and mobile wallets are complex, multi-level solutions. They’re more than just server calculations paired with a user interface. Your product should be legally valid, well-encrypted and with a thought out positioning plan.
In this article we’ll name the 5 steps you shouldn’t skip when developing your own e-commerce solution.
Focus on product positioning
Positioning is something that is often underrated by brands, yet it’s essential for product marketing. One doesn’t simply win the market with yet another “best e-wallet ever”. Fintech products of high quality are already there, enjoying their huge market shares. But keep your head up, the war is not over yet. Users have only made the best choice possible today. They could start using your mobile wallet or payment system tomorrow; your product just needs to be appealing enough to try and useful enough to stay.
Target those audience segments that are overlooked by big brands. Learn their problems and desires to create a fintech product of maximum user value. You can follow the example of our client, e-commerce and mobile money company Ezuza. They launched their mobile wallet in Mexico with a focus on millennials and small businesses. Proper positioning has already made them a leading Mexican mobile payment company.
Think through the product’s functionality
Features of your online payment system should be more than just a list of bullet points on your landing page. The genuine role of each and every function is to improve the user’s life. It can be a daily routine automation, privacy assurance or any other feature that brings customer value. Find out what it is really valuable, and make it available.
The market itself determines what features of your online payment system or e-wallet will be most in-demand. Our friends from Ezuza examined the market and identified consumers’ needs. Their potential audience had a craving for a user-friendly mobile wallet to pay bills and make P2P transactions with a reasonable fee. Besides these features, users wanted to top up their mobile wallets with help from Ezuza agents. No sooner said than done. We built two separate apps for agents and clients. Now users can top up via 3rd party online payment systems, integrated with Ezuza e-wallet, or ask Ezuza agents.
An online payment system contains many unique parts. UI & UX design, encryption and security, verification, billing & invoicing, Interbank Exchange, fraud & money laundering prevention, account management, marketing & sales, partnership and market research just to name a few. These are things to consider not only when you develop a complex online payment system, but also a simple e-wallet.
When we built fintech products for EBANQ and Ezuza, we had to do a lot of integration with 3rd parties like WaveCrest, OXXO and various national banks. Make sure the vendor you choose can solve complex integration tasks.
When developers encounter unusual tasks, they look for clear documentation. If you are going to integrate a 3rd party system that is not well-documented, be careful. Your developers will probably have trouble turning questions into answers. Poor technical documentation won’t help them find a solution and will increase the project cost. Try to provide a development team with proper guidelines, or make sure your 3rd party vendors assist your developers via email or voice calls.
Secure all transactions
All transactions you perform within your online payment system must be well-encrypted and secured by all possible means. We use 256-bit SSL encryption and provide all online payment systems we build with HTTPS protocols. To prevent Man-in-the-Middle and other malware, we use DES, RSA and symmetric-key algorithms. All secret data in our fintech projects is encrypted by asymmetric cryptography according to AES when transferred between a client and server.
Don’t overlook the basic principles of security. In order to protect the data of Ezuza users we made it impossible to install an agent’s app on rooted devices. It may be obvious, but not all of us pay enough attention to this tiny safety measure. When user data can be accessed only on authorized devices, your online payment system becomes more secure from frauds and ransomware.
Prepare for production testing
Even a coloring app shouldn’t be released without being tested. If you deal with payments and banking software, testing is more than just important, it is life-critical and fundamental. But don’t start a crusade against your developer team when something goes wrong.
Some systems can be tested only in production. For example, if your system is integrated with a traditional bank for users to pay bills. You ask your developer to check whether the transactions work as expected or not. You can check it in a test environment, but you can never be 100% sure the system will behave the same in production. Therefore, there is no rescue for your software development vendor, except to perform production testing. QA engineers can create user accounts after the release and make real transactions. There is no other way but to try it out.
If this sounds pretty similar to your situation, ask your developers to add a toggle switch mechanism so you can switch off a particular payment channel if something goes wrong. In the Ezuza app, we tested no more than 5-6 mobile payment channels at once and stayed vigilant.
Last but not the least
There is one more question you should ask yourself before starting your online payment business: “Do I need any form of a licence to roll my service out?”. In most cases the answer will be yes. In almost every country you’ll find a financial regulator that prevents citizens from being robbed by sneaky digital entrepreneurs. You will first need to come to an agreement with some national bank, a monetary fund or other authorities. This might not be easy, but you’ll be rewarded with a licence and a permission to legally run your business. By the way, in Singapore you can get a licence easily, but it is the only country with such liberated legislation.
Pay special attention to all these activities and you will build a highly competitive mobile wallet or payment system. The more unique your value proposition will be - the bigger piece of the pie you will get. All in all, it’s not an easy task to build a system that will push PayPal back. The development efforts of a single team are barely enough to build a product of such class in one go. Great products tend to evolve through acquisition, merger or partnership.
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