What should someone know in order to build an e-commerce payment system in a developing country?
Payments
Asked by Question Bot05/Jul/20141 answer
1 Answer
F
Faisal Khan
Answered 05/Jul/2014
Start with the Legal. Make it legal first and then work backwards towards the product (or service).
If you are going to be developing any e-commerce based payment system in your (developing?) country, the first place to start with is your Financial Regulator. In most cases this would probably be your central bank.
Though each central bank differs from one another, most have the same objective: to facilitate and regulate the financial system. Try searching who looks after Payment Systems in your central bank, and that should be your starting point (in my opinion).
Inquire what requirements / prerequisites (if any) exist for a company to start up a payment system. Be very clear in the definition of what you are planning to start / roll-out. For example, if you are just going to be a payment service provider (PSP), elaborate this definition by saying (eg): "We plan to become a payment service provider in this country, providing online credit & debit card processing via our payment gateway that is associated with the following acquiring bank". It may very well turn out that you may not need any operating license or permission from the regulator, since you would already be partnering up with an acquiring bank. In some countries, they might require you to have a no-objection certificate issued, prior to commencing operations. So, central bank first.
Having said this, I think the next line item should be a business plan. You to need to have one. You need to know the market opportunity, existing players, room for growth, market dynamics, etc. If there isn't a player in the market, why is it so? Maybe it doesn't make financial sense? Maybe the law forbids non-banking players to enter? maybe no one wants to use your payment system and they rather use a foreign one?
Part and parcel of your business plan would be to understand how everything works. Payment Systems is too broad a topic to ask how it works. You may want to read up on How does the payments ecosystem work? What does the payments workflow look like, from the merchant’s card payment to the acquirer? What are the roles of each of the main firms in the space, like First Data, PayPal, Neteller, Square, Visa, etc.?
Be prepared to read up a lot. How a specific payment system works, is something you would need to research and read up on. There are many variants and each comes with its own set of rules & tools for a specific market and audience. Whilst Q&A sites like Quora are helpful, they essentially provide you a nudge and point in the right direction, but they will not do the homework for you. What programming language to use? How to make a mobile app? There is very little a priori information that you provide to provide answers to those sub-questions. These questions can be answered later on.
If for example you are planning to become a Payment Service Provider, reading up on the various FAQ sections on Braintree (company)'s website is an educating experience. You may also want to head over to VISA and Mastercard's website and read up on their acquiring business aspect, and the various manuals and publications they put out.
Going and becoming a PSP (for example) is certainly not a job for a single person. You need domain knowledge and hence you would either bring a consultant onboard or involve a company that provides consultancy services in your geographic area with regards to payments and payment systems.
If you are going to be developing any e-commerce based payment system in your (developing?) country, the first place to start with is your Financial Regulator. In most cases this would probably be your central bank.
Though each central bank differs from one another, most have the same objective: to facilitate and regulate the financial system. Try searching who looks after Payment Systems in your central bank, and that should be your starting point (in my opinion).
Inquire what requirements / prerequisites (if any) exist for a company to start up a payment system. Be very clear in the definition of what you are planning to start / roll-out. For example, if you are just going to be a payment service provider (PSP), elaborate this definition by saying (eg): "We plan to become a payment service provider in this country, providing online credit & debit card processing via our payment gateway that is associated with the following acquiring bank". It may very well turn out that you may not need any operating license or permission from the regulator, since you would already be partnering up with an acquiring bank. In some countries, they might require you to have a no-objection certificate issued, prior to commencing operations. So, central bank first.
Having said this, I think the next line item should be a business plan. You to need to have one. You need to know the market opportunity, existing players, room for growth, market dynamics, etc. If there isn't a player in the market, why is it so? Maybe it doesn't make financial sense? Maybe the law forbids non-banking players to enter? maybe no one wants to use your payment system and they rather use a foreign one?
Part and parcel of your business plan would be to understand how everything works. Payment Systems is too broad a topic to ask how it works. You may want to read up on How does the payments ecosystem work? What does the payments workflow look like, from the merchant’s card payment to the acquirer? What are the roles of each of the main firms in the space, like First Data, PayPal, Neteller, Square, Visa, etc.?
Be prepared to read up a lot. How a specific payment system works, is something you would need to research and read up on. There are many variants and each comes with its own set of rules & tools for a specific market and audience. Whilst Q&A sites like Quora are helpful, they essentially provide you a nudge and point in the right direction, but they will not do the homework for you. What programming language to use? How to make a mobile app? There is very little a priori information that you provide to provide answers to those sub-questions. These questions can be answered later on.
If for example you are planning to become a Payment Service Provider, reading up on the various FAQ sections on Braintree (company)'s website is an educating experience. You may also want to head over to VISA and Mastercard's website and read up on their acquiring business aspect, and the various manuals and publications they put out.
Going and becoming a PSP (for example) is certainly not a job for a single person. You need domain knowledge and hence you would either bring a consultant onboard or involve a company that provides consultancy services in your geographic area with regards to payments and payment systems.