Hi all,

anyone knows what is involved when starting your own credit card 3rd party processor? What are the starting fees of such a journey?

I'm a web developper and I've been googling for quite some time but I didn't find relevant info yet. I know quite well the software/hardware thing but for the banking procedures involved, I am clueless.

Thanks in advance!

Starting a 3rd party processor or IPSP(internet Payment Service Provider) is a very expensive journey. Millions of dollars are required with the new card association rules regarding IPSP's.

you are going to need software developers, to get something out in 12 months you'd need a good few of them

you are going to need lots of other members of staff to manage it

you're going to have to meet security assesments

you are going to have to have a LOT of cash


Ive been to see an outfit which has tried for a number of years to meet Visa card printing regs and that is an up hill battle. The company isny small, a few 100 employees and they currently print council tax cards and manage some in store payment gateways.

That said even they have found it hard to get into bed with visa.

Yea, everyone's pretty much on the ball here -- starting a 3rd party processor is very expensive and personally, I wouldn't recommend it. Depending on the nature of your customers you may be better off getting set up as a PSP with licensed gateway software and direct agreements with an acquiring bank to set merchants up with direct IMAs of their own.

i was thinking of this project about one year ago , i couldn't find good investors
but my ideas still rocks for it .
anyway you can count me in

Millions of dollars are required with the new card association rules regarding IPSP's.


Millions? I know a company that has 3 developers who started a website where people can open shops and sell videoclips. They collect the money on the behalf of the shop owners then send a weekly payout. This is what I would like to do. I think they spent about 10K to 20K to start their business.

I suspect they won't answer me if I ask how to start such a business.

My questions are:

Is this called being a third party processor in the first place?

Can I use a normal merchant account to collect the money and then issue payouts afterwards?

Millions? I know a company that has 3 developers who started a website where people can open shops and sell videoclips. They collect the money on the behalf of the shop owners then send a weekly payout. This is what I would like to do. I think they spent about 10K to 20K to start their business.

I suspect they won't answer me if I ask how to start such a business.

My questions are:

Is this called being a third party processor in the first place?

Can I use a normal merchant account to collect the money and then issue payouts afterwards?

The term for processing you described is known as kiting or aggregating, which is not permitted by credit card associations.

That may not necessarily be aggregating. If it's all pretty much the same product (downloadable videoclips) then it can all be under the umbrella of one company. The "shop owners" would sign up as marketing affiliates to your company, post their videoclips, and your company would sell them to customers. Then your company would pay a substantial commission to the affiliate who signed up. Think CafePress.

When you collect money on behalf of someone else (for the products that do not belong to you), it is aggregating.

If they are your products and you have affiliates helping you to sell the products, it is not aggregation.

When you collect money on behalf of someone else (for the products that do not belong to you), it is aggregating.

If they are your products and you have affiliates helping you to sell the products, it is not aggregation.

Does Amazon write all their own books?

Does Amazon write all their own books?

No, but they may own them :)
I believe products are shipped out from their warehouse.

Correct. And digital products such as videoclips are downloaded from their web site.

That may not necessarily be aggregating. If it's all pretty much the same product (downloadable videoclips) then it can all be under the umbrella of one company. The "shop owners" would sign up as marketing affiliates to your company, post their videoclips, and your company would sell them to customers. Then your company would pay a substantial commission to the affiliate who signed up. Think CafePress.


In short, if shop owners 'give' me the copyright of their videoclips, they become 'mines' and then they can be sold to customers. Everything falls in the rules of visa/mastercard I guess.

thats correct , you can play with rules when they want to stop you

I believe it can be done. I am not sure of the legal problems associated, but clickbank.com does it, they accept payments for thousands of products which they do not own. so you may check out their site.
One thing you may be able to do would be to would be to get the product owners to give you "resell rights" to their products, with you paying them "royalties" for each sale? that may overcome the legalities.
The costs would not be too much. the majority of the cost would be advertising budget, the scripting should take $500 to $1000, and say another $500 to $1000 for professional design, and a good hosting.

I believe it can be done. I am not sure of the legal problems associated, but clickbank.com does it, they accept payments for thousands of products which they do not own. so you may check out their site.
One thing you may be able to do would be to would be to get the product owners to give you "resell rights" to their products, with you paying them "royalties" for each sale? that may overcome the legalities.
The costs would not be too much. the majority of the cost would be advertising budget, the scripting should take $500 to $1000, and say another $500 to $1000 for professional design, and a good hosting.


Well thanks for the information as I do not have 'millions' to start such a business. It will be easier that way!

How the hell is 2CheckOut working? Isnt that clear cut aggregating? Same with Plimus.

Edit: Plimus is a processor by themselves, I guess.

Your best bet would to become an agent for an ISO, there is no start up cost and you will get most of the revenue brought in. Do some research on ISO's and there agent programs and find the one that is best for you