Setting up Payment Stack Integrations the Right Way

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Anta Pattabiraman

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April 19, 2022

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Setting up payment stack solutions can be tricky, but it’s absolutely essential to get it right. Minor mistakes can cause major damage to your ability to process payments, slowing or even stopping your revenue stream. Learn what you need to know to get your payment stack set up properly.

In this post, we’ll start by defining the payment stack and highlight components that are common in setting up the integration. Then we’ll review the process of building your payment stack. Finally, we’ll identify six of the most common mistakes made when setting up payment stack integrations, along with some best practices for avoiding these errors. Read on to learn how to set up your payment stack integration the right way and keep your revenue flowing.

What Is a Payment Stack?

A payment stack is the set of technology components you need in order to process payments. The “stack” terminology comes from the IT industry concept of a solution stack or software stack, which refers to the technology infrastructure needed to deliver an application to the end-user. The set of technological components involved is referred to as a stack because the components are arranged in a series of layers, where each piece of hardware or software interacts with the layer above and below it. When this concept is applied to a payment processing context, it refers to all the technology needed to allow merchants to accept credit and debit card payments from cardholders.

The technology in a payment stack supports a series of interactions between all the parties involved in a payment transaction. Parties involved include:

  • Buyers
  • Card Issuers
  • Issuing processors, which accept or decline card transactions
  • Card networks such as MasterCard and Visa
  • Merchant Acquirers
  • Payment gateways or processors such as Square and Stripe
  • Merchants accepting payments

The purpose of setting up an effective and efficient payment stack is to ensure smooth experience for everyone involved - including financial institutions, gateways, merchants and customers. For example, buyer credit card data needs to be checked against databases of car issuers, issue processors and card networks to assure a valid transaction, and once the transaction is approved, the data needs to be handed on to the merchant’s bank for deposit.

Handling these types of data exchanges smoothly results in a quick, no-hassle and frictionless experience for both the buyer and merchant. In contrast, a fumbled data handoff at any point in the process can disrupt the entire transaction. This is why a well-designed payment stack is so critical for a sustainable business model.

What Are Some Common Elements of a Payment Stack?

A number of core components contribute to a payment stack. These include:

  • Checkout interfaces and associated software for accepting payments online or at brick-and-mortar point-of-sale systems
  • Payment gateways, which authorize payments by passing transaction information on to issuing banks, issuing processors and card networks for verification
  • Fraud prevention technology for flagging suspicious transactions
  • Settlement and reconciliation software and procedures for verifying internal consistency between receipts and accounting books and external consistency between accounting data and bank statements
  • Reporting services for summarizing key transaction information and passing it on to parties participating in the payment stack network

A functional payment stack depends on the correct set-up of all these components and effective integration of interactions between them.

How Do You Build Your Payment Stack?

Building a functional payment stack that ensures a frictionless commerce experience between parties requires selecting technology providers for each of the core components.

Different providers have different strengths and weaknesses, therefore a merchant’s web development team needs to be knowledgeable about provider options and software features to exercise due diligence when selecting providers and optimizing setup.

The most efficient way to build a payment stack is to work with an orchestration platform which allows you to connect to multiple providers in a single integration. This lets you pick the best-in-class provider for each layer of your payment stack and then combine strengths of each provider into a single integrated system.

Six Common Mistakes Made When Setting Up Payment Stack Integrations

Mistakes can be made when setting up any component of a payment stack integration or any integration between components. Here are six of the most common mistakes often made, along with some tips on how to avoid them.

1. Not Planning Your Payment Stack Setup to Grow with Your Business

A good payment stack promotes revenue flow which makes your business grow, so your stack needs to be able to scale up with your business. You may want to make important changes as you grow, such as:

  • Adding or replacing processors
  • Enhancing your fraud protection with new providers
  • Using custom logic, such as a particular processor for a niche market

Failing to anticipate your needs as you grow can result in expensive development headaches down the road. Planning your stack solution to accommodate anticipated growth will save you extra work and hassle in the future.

2. Not Offering Your Target Audience’s Preferred Payment Methods

Every customer has their own preferred payment method. In some markets, certain payment methods may be more prevalent than others. This can be a particular issue if you do business in multiple countries. Failing to accommodate your market’s preferences can result in lost sales. Research your target market’s payment preferences and make sure you’re offering the payment methods preferred by your niche, including localized payment methods for specific geographical regions.

3. Not Investing in Data Security

Data theft can rob you of revenue and undo months and years of hard work growing your business. Despite this risk, many merchants fail to invest in data security by doing due diligence in choosing secure vendors who can protect your data and your customers’ data from fraud and identity theft. A related mistake is trying to do your own PCI compliance, which requires expertise beyond the capability of most in-house teams. Protect your data by choosing secure vendors who can handle compliance professionally.

4. Not Working with a Vendor Who Protects You from Fraudulent Transactions

Another security problem can arise when you don’t select a vendor who can protect you from unauthorized payments or chargebacks made with stolen credit cards. These types of fraudulent transactions can damage you in several ways, robbing you of sales, costing you chargeback fees and harming your reputation with customers. Make sure you select a vendor who has strong fraud protection protocols in place.

5. Not Noticing Hidden Processing Fees

Another mistake when choosing vendors is failing to note hidden processing fees which can cut into your revenue. This can result from failing to read contracts carefully or not understanding industry terminology. For example, “lowest rate” credit card processing does not actually mean the lowest total cost. Startup fees, equipment fees, maintenance fees and extra fees for e-commerce, apps and debit acceptance are just a few of the hidden fees which can lurk in the fine print. Make sure you understand all the fees your provider is charging and do a cost-benefit analysis before settling on a vendor.

6. Underestimating the Value of Strong Product Support

Another error when selecting vendors is undervaluing the role provider support plays in the success of your stack integration. Setting up payment stack platforms takes familiarity with all the apps involved as well as how to integrate each component together. Trying to do this without strong support significantly increases your risk of error. For best results, choose a product which is easy to implement and comes with strong support. If your in-house technical know-how is limited, be sure to choose a provider who can work with you where you’re at, so as to avoid hang-ups resulting from lack of technical know-how.

Setting Up Payment Stack Integrations Properly Pays Off

Your payment stack consists of the technological infrastructure components which enable you to process payments. These include checkout interfaces, payment gateways, fraud prevention technology, settlement and reconciliation software and reporting services. Setting up payment stack integrations depends on the careful selection and integration of providers supporting each of these functions.

Payment stack setup can be hampered by a number of common mistakes. Failing to plan for scaled growth, neglecting preferred payment methods and failing to invest in data security are some of the most common technical errors. Other mistakes involve vendor selection, such as failing to screen vendors for fraud protection, hidden fees and support.

The inai payment integration platform is designed to make it easy for digital businesses to set up a payment stack that connects with 500+ methods your customers may need. You can be up and running in as little as 60 minutes. Take a few minutes to fill out our online form and book a demo.


About the author
Anta Pattabiraman is the co-founder and CEO of Inai, a global payment stack simplifying native payments within a single integration. Over the last 5 years, he has worked with 200+ businesses ranging from SMEs to Bigtechs.
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