Build vs. Buy: Putting Together a Modern Payments Tech Stack

5 Major Considerations Behind the Build vs. Buy Decision

Some of the biggest considerations that go into the build vs. buy decision are universal — factors like costs, available time and in-house expertise. Others represent challenges that are uniquely difficult to manage in the payments industry, like regulatory requirements and rapid industry evolution. In all cases, carefully weighing the trade-offs is critical. Because the payments space is so competitive and moves so quickly, companies can’t afford to get stuck with the wrong solutions.

Cost

The most obvious factor you need to consider is the cost of building vs. buying. This isn’t a simple comparison, since the bulk of each option’s costs occur at different times. For instance, building requires a large upfront effort which can be nerve-wracking, especially considering the potential for overruns, bugs and any necessary reworks that arise after internal user feedback. The immediate cost of an off-the-shelf solution is generally tiny by comparison — especially when partnering with a provider who offers ways to monetize payments.

Maintenance is another important cost to factor in, especially in the payments space. When you buy a payments solution, the costs for maintenance and updates are completely borne by your partner. In contrast, if you build one yourself, you’re responsible for the upkeep. 

In a space like payments, which evolves at a breakneck pace, staying up-to-date can be costly. Unless you have extremely specific and unique needs, a third-party solution may be a better choice purely as a way to minimize the lifetime cost of maintenance and redesign for payments-specific factors like:

• New technology integrations
• New regulatory or reporting requirements
• New security considerations
• Platform or device specification uplifts, and more

Time and Effort

The next most obvious factor is the time it takes to build a payment solution from scratch — a variable inextricably linked to your team and your in-house expertise. Is time critical? Is getting the new system online necessary to serve your merchants properly or go to market? If yes, then you need to carefully measure the risk of a delayed launch and any impacts on revenue and service that may occur when building something yourself.

For instance, if you decide to build in-house, you will inevitably have to become the expert in whatever solution you’re building. This means you will eventually need to adjust your organizational structure and headcount to accommodate this new area of expertise. Practically, that could look like a new technical compliance team, a new security team, and a general compliance team to oversee industry-related policies and regulations.

If you do decide to build, how long will it take based on your internal capabilities? Payments is a complex industry with intricate security and regulatory requirements. Even with a highly capable in-house team, building something like a fully custom payments CRM or gateway is an enormous task. How long can you afford to wait for it, especially if something off-the-shelf will fill the role just as well (if not better)?

Competitiveness

How critical will the final solution be to your core business operations? Is there any competitive advantage to building it yourself? First, if the answer is “not critical at all,” it rarely makes sense for you to spend time and money building. Tools for support functions should be purchased. 

But if the tool you need is critical to your core business, ask yourself: 

• Is an off-the-shelf solution that meets your needs available?
• Will using that solution damage or enhance your ability to compete and serve your merchants?

For instance, in the payments space, using an off-the-shelf gateway with a white-labeled skin won’t hurt your competitiveness or your brand positioning, although using one without white labeling might. Likewise, when it comes to CRMs, using a generic off-the-shelf solution may put you at a disadvantage to competitors using a custom-built system or a payments-specific third-party solution like NMI Merchant Central.

Security

One of the most unique aspects of building tools in the payments space is the security requirements. Payment card data is a high-value target for cyberattackers, which means systems need to be airtight and constantly updated to stay ahead of evolving threats. Payment systems also need to be fully compliant with the Payment Card Industry Data Security Standard (PCI DSS), which is a complex and exhaustive set of mandatory security protocols designed to protect consumer data.

If you decide to build from scratch, you’ll need to ensure your team has the experience and expertise necessary to design solutions that meet all the unique security needs of the payments space. If you buy, much of that responsibility is shifted to your provider, which could reduce your PCI scope and risk exposure significantly.

Flexibility and Scalability

Finally, consider what your needs will look like in the future, as your payments business grows and your software requirements evolve. Building puts you in complete control, which means it’s the most flexible option available; you just need to be prepared for the additional costs of maintenance and future expansion and development. 

With off-the-shelf solutions, one of the biggest risks is that you’ll become dependent on rigid systems that you’ll ultimately outgrow. That can make migrating to a more capable system painful and expensive, and potentially cause business interruptions.

One solution is investing in modular payment systems. 

Solutions like these allow for the convenience and cost savings of buying without the scaling issues. Unlike a large, one-size-fits-all software stack, a modular payments platform allows you to choose the solutions you need and plug them in and out of your business with ease. You can start by designing an “off-the-shelf” solution tailored to your current operations. Then, as you grow and your needs change, you can integrate additional features as the need arises. This model offers not only a high degree of flexibility but also a cost-effective approach.

Build, Buy, or Both?

Build vs. buy is an age-old question, but it’s a false dichotomy in today’s market. The right partner will offer everything you need to succeed, while providing modular, flexible options so you can effectively take the build route while still enjoying the convenience of off-the-shelf components.

At NMI, we offer a wide variety of integrations, as well as a full suite of modular payment systems that make it fast and easy for you to design your ideal tech stack. Whether you need a white-label payment gateway, a merchant onboarding solution, an automated merchant underwriting system, a full payments CRM or any combination of our tools and services, we have what you need.

Reach out to a member of our team today to find out more about why NMI’s fully modular payments platform is the best answer to the build vs buy conundrum.