Core Components of a Payment Technology Stack

The payment technology stack is made up of key components that work together to process payments efficiently and securely. Each part plays a specific role, from moving payment data to protecting it.

Five core elements contribute to a reliable payment system. Understanding these components is essential for SaaS providers and ISOs.

Payment Gateways

A payment gateway acts as the bridge between customers, merchants and payment processors. It securely transmits payment information like credit card details from the customer to the payment processor. When the processor approves the transaction, the gateway sends that approval back to the merchant.

This essential technology enables  fast, accurate and secure transactions. A reliable payment gateway allows ISOs to deliver a smooth checkout experience while safeguarding customer data.

See a Gateway Solution in Action
Looking for an example? Check out thi case study on Illinois Tollway.

Payment Processors

Payment processors are the engines that drive payment transactions. They manage the authorization of transactions and facilitate the transfer of funds between the customer’s bank (the issuing bank) and the merchant’s account (via the acquiring bank). This enables payment facilitators (PayFacs) and ISOs complete transactions quickly and reliably. Working with trusted payment processors is crucial to delivering a seamless payment experience and ensuring the secure, accurate transfer of funds.

Fraud Prevention Tools

Fraud prevention tools leverage technologies like AI, machine learning and behavioral analytics to help keep payments secure. They detect and block suspicious activity before it results in financial harm.

Fraud prevention systems analyze patterns in payment data. Doing so helps them identify unusual behavior, such as unauthorized transactions, account takeovers or potential scams. Investing in robust fraud prevention tools reduces risk, protects customer information and maintains their trust in your payment platform. It is a critical component of a strongpayment security strategy.

Strengthen Your Fraud Defenses
 For a real-world example of advanced fraud mitigation, explore how SVPay drives rapid growth with NMI Merchant Relationship Management.

Tokenization and Encryption

Tokenization and encryption are key technologies for securing payment data. Tokenization replaces sensitive information, like credit card numbers, with unique tokens that have no usable value if stolen. Encryption, on the other hand, scrambles data so it can only be read by authorized parties.

Together, these technologies protect payment information during storage and transmission. This layered security approach reduces the risk of data breaches and reassures customers that their sensitive data remains safe.

For more details on advanced security measures, see our Merchant PCI Compliance Demystified: Simplifying Security guide.

Understanding Interchange Fees and DFA Costs

When you accept card payments, you incur certain fees for payment processing. These are interchange fees and dues, fees and assessments (DFA). Interchange fees are set by card networks like Visa and Mastercard and are paid to the cardholder’s bank (the issuing bank) for processing the transaction. DFA costs, on the other hand, are additional fees charged by the card networks themselves.

To help optimize these costs, consider the following strategies:

• Partner with efficient payment processors offering competitive rates and transparent pricing
• Encourage customers to use lower-fee payment methods where possible
• Ensure transactions are correctly categorized to avoid unnecessary charges

Understanding interchange and DFA  fees is an important step in making informed decisions about your payment system and improving your overall payment acceptance strategy.

Benefits of a Well-Integrated Payment Stack

A well-integrated payment stack can transform how you manage transactions. Let’s look at the key benefits:

• Scalability: A scalable payment stack grows with your business. You can handle higher transaction volumes without compromising speed or reliability

• Modularity: Modular payment solutions allow you to pick and choose the tools you need, like fraud prevention, detailed reporting or tokenization. This customization allows you to tailor your payment stack to your specific business requirements

• Flexibility: Flexible payment technologies adapt to evolving needs, supporting new payment methods like mobile wallets, subscriptions or recurring billing. This flexibility helps you expand your payment options and stay competitive in a changing market

Customize Your Payments Ecosystem
To explore strategies for tailoring payment solutions to your platform, read our whitepaper The Ultimate Embedded Payments Guide for SaaS Providers.

A modern, integrated payment stack is more than just helpful. It’s essential for your growth and success.

Partnering With NMI for Your Payment Technology Needs

Building and managing a payment technology stack can feel overwhelming. But with NMI, it doesn’t have to be. Our comprehensive, modular payment acceptance platform lets you customize your stack to fit your exact needs. With tools like secure payment gateways, advanced fraud prevention and flexible integration options, NMI helps you enable seamless transactions across all channels.

Partnering with us is straightforward:

• Contact us to discuss your payment needs and goals
• Work with our experts to design a tailored payment stack using our modular tools
• Implement the solution with guidance from our dedicated onboarding team

NMI also provides extensive support resources, like training materials and live technical assistance, to ensure a smooth transition. Whether you’re a growing business or an established enterprise, we can help you create a flexible, scalable and secure payment solution.