A picture of the "chance" square on a Monopoly board, symbolizing the opportunities of re-built payment systems

Why You Should Change Your Legacy Payment System

You have a big problem with your payment system. 

At least that’s why we suppose you read this article. 

Maybe your business just started, but the payment system you integrated already struggles to meet customer expectations. Or you run an established platform, but your legacy system has grown into an inflexible and costly monolith of different providers.

If you work with a particular provider like PayPal or have integrated a variety of individual acquirers or PSPs, you cannot excess full control over your payment. For example, feature updates, security or transaction limits and fees lie outside your agency. 

However, perhaps your transaction system runs just fine, it is functional and flexible. But have you utilized its full potential yet? Have you thought about adding e-money wallet functionalities to enable P2P transactions, loyalty point systems or quick refunds? 

Whatever of the above is the case, this article is for you. It will discuss how you can turn your legacy system into a version that better suits your needs. By finding a proper payment solution provider and adding payment orchestration and e-wallet functionalities, you will be able to take back control. 

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A computer besides a wallet, symbolizing payment gateways, online payment and ewallets

E-Wallets or Payment Gateways – A Comparison

When we compare e-wallets or payment gateways to payment with card or cash, we often evaluate the former as more convenient. That might be a bit of an overstatement, really. Holding your credit card in front of a card reader does not exactly sound like much work, does it?

No, what really makes modern digital payment methods so powerful is their feature-richness and flexibility. For example, you can simply conduct cross-border payments or transfer tiny amounts of money with digital payment methods. And even if you are bound to our own four walls (for some reason), you can pay for goods and commodities with just a few clicks. 

But payment does not equal payment. Behind the scenes of your checkout page, in the technical profundities of the software, it makes a huge difference whether the payment happens via an e-wallet balance or a digital bank or credit card transfer, facilitated by a payment gateway. 

Payment Gateways vs. E-Wallets? Not Quite!

However, make no mistake and don’t take “Payment gateways or e-wallets” literally. The two are not exact opposites: You need PGs to process a transaction no matter what. The real question is: How exactly does using e-wallets vs. regular payment providers influence the payment process, especially regarding user experience? 

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A robot hand holding a vintage ladies' wallet, representing electronic wallets or e-wallets, respectively

What Is An E-Wallet – Definitions and Technical Distinctions

E-wallets are software programs which securely store data. This data is needed to enable the wallet owner to conduct payments online or at points-of-sale. And they do so by use of a specific device.  

That’s as close to an encompassing definition of e-wallets, or electronic wallets respectively, as we will probably get. But it’s also just the surface of what electronic wallets – sometimes also called digital wallets or (obsoletely) cyberwallets – can do. Over the last decade, e-wallet technology has found application to a variety of use cases. This article will cast a light on the term E-wallet, especially in the context of online payments. In the following paragraphs you’ll find: 

  • Definitions of certain types of e-wallets 
  • An overview of their common functionalities 
  • A breakdown of e-wallet-based payment 
  • An outlook on their role in the future of payments and e-commerce
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Two businessmen lining out a payment gateway for their online marketplace and other platforms of the platform economy.

Empowering the Platform Economy

aye4fin Managing Partner Thomas Tittelbach, presenting 5 important topics when creating payment gateways on a business level.
Thomas Tittelbach, Managing Partner at aye4fin gives you a detailed overview of how to approach building a payment gateway from a business perspective.

E-commerce is a growing market – but it’s not taking place entirely within single online shops. By far not. Online marketplace environments have cemented their presence all over the web, be they specialized in dealing with certain types of goods or all-in-one digital warehouses. In addition to retail, service platforms and even comparison portals have found their niches as well. In short: We live in the age of the platform economy – driven by smooth-flowing online payment solutions.

Yet sometimes the last part is more wishful thinking than reality. Payment processing requires a payment gateway designed for the specific transaction flows, which occur in marketplaces. And if you want to design such a well-functioning solution yourself, you can turn it into a business case on its own.

Of course, there are things to keep in mind, from a business perspective. In this second part of our Article Series on Payment Gateway Building, we give you an overview of those. Here are five topics to consider when building payment gateways for marketplace platforms.

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A person holding a credit card facing an online marketplace, symbolizing online payment and the payment gateways in charge of the transfer

How to Build a Payment Gateway: Definitions and Central Questions

Digital platforms are the go-to spots for e-commerce – and terminals for countless payment transactions. Online marketplaces like Amazon or Alibaba present themselves as the popular top dogs in this area. But they only compose a fraction of the platform economy. 

Today’s online marketplace platforms offer goods, services, jobs, and business partners. And then, we’ve said nothing about comparison portals like Check24. They browse external platforms to find the best offers, acting as “meta marketplaces” of a kind. 

But whatever platform you use: The point will come when you will have to pay for what you have obtained. At this point, Payment Service Providers and Payment Gateways make their appearance. It’s their job to detect fraud and validate the purchasing agreement. And ultimately, to debit your account and move your money – in the virtual as well as the physical sphere.  

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