Hi guys Im currently doing research on developing a payment processing system like pay pal in my country. What im intrested in is a system that is a bit lighter then paypal and is targeted a million users for now. I want users to deposit money or tranfer it online to their accounts (on the site) and then be able to use it to buy online. What i would like to know is what exactly is needed to make such a system. My budget is $400k. Thank you
interesting thing. As a starting budget it just seem good. but are you a developer or you are looking for developers?
Hi Omarabid Im not a developer im just a guy who has the idea and finacial backing but does know where to start and what do i need example the Type of developers,servers,compliance issues etc. I need to know what is needed.
that's a very good idea but I don't think your budget is enough for this kind of system. Also you need to get some licences locally to setup a payment processing company and I think that thing will require a hugh amount of investment.
Starting such business needs consulting; you'll need to speak with expert. With $400K; you should spend at least 5% on consulting, that's around $20K. Sure, not from the first time, but as long as you progress you'll need more experts: some $$ now can save you huge money. Just read about patents or restrictions that your or any other state has made in the past for such startup or even big companies and cost them millions. --> Get a Lawyer. and probably a lawyer dedicated and informed in the matter. For programming, making a team when you are not a developer can be a little tiring. An idea is to purchase a related startup. You can get it for cheap if they still starting or failed, or may be invest in a startup. May be if you push the discussion further I can know more your situation.
@ Omarabid Im in South Africa the Market is 5 million online shoppers.with regards to the legal expert im an Attorney who knows other Attorneys who may help but as far as a similar payment system as the one in my mind there is non. There is a company here that has a payment system but they not doing it right they are focusing on the wrong market and the enterprenuer in me cannot buy into them,i want to start from ground up. What sought of programmers do i need for this and cant i source them in other countries like Russia,India or US,
I don't know the regulations in your country, but I would first go about figuring out those. Throughout this process, any research you can do yourself will save you a lot of money and time from having to hire an attorney or someone else to do it later. However, it's possible that the information you are trying to find won't be publicly available or easy to find. If you can find any one who has done what you are doing in a similar country, it can really help your chances of success. Here's a few areas, I would check before getting to far into this. Find out if your country is on any sort of banking / credit black-list. This would be like countries with trade sanctions or other international political issues. If you're on one of those, it's probably not going to be feasible to start a processor until those conditions clear up. Just look at the number of no paypal in Pakistan comments in the forum. If pakistan has a million people that would use paypal, but paypal still can't get established, it's a lost cause for anyone with smaller pockets. You need to find out how established the banking systems are in your country, and if they piggy-back on existing infrastructure like RBS or other international banks. You also need to find out if the type of business you are trying to start is even legal, as many countries only allow banks to handle payment related services. If your country is ok on this type of business, you need to find out what sort of processors exist in your country. If there are none, you probably have a lot of work cutout for yourself. Now if you are referring to starting a business like paypal, what they are doing is called aggregating. You will need to find an international or offshore sponsoring bank and processor that allows aggregating, and can support the country you are in. With this relationship, you should be able to gain instant access to Visa/MC processing networks, which will facilitate the transfer of money to and from the users to your system. Bank accounts are an entirely different subject, which is why understanding the banking system is very important. You have to be able to easily fund the people who are using your system, and through a bank account is usually the best way. The alternative would be to figure out how to become a platform yourself, but I don't think your budget would allow for this. It would be extremely expensive, difficult, and very risky. Since there's only a handful of platforms in existence, I can't even imagine what it would take to set something like this up, so I would lean towards an offshore processor on an existing platform. Nobody has ever set one up from scratch, as they are built out of necessity. This is essentially the operations side. I would estimate that most of your budget should be reserved for a holding reserve with the sponsor bank. A large reserve is going to be the only way to get your costs to a competitive level. Once you are able to establish the proper relationships to pull this off, you need to figure out the programming / development. Systems like this need to be very reliable, secure, and well designed for scaling and accountability. Assuming that you are establishing a system like Paypal, you need to be able to have accounts hold a balance, much like a bank. You need to be able to screen for fraud, handle disputes, underwrite accounts for risk. These requires precise programming, logging and accountability of everything. Not only will your users not trust you if there is even small bugs or glitches, but you can easily find yourself getting charged with financial related crimes. Again, this is going to take extensive knowledge of banking application standards. Something as simple as rounding a number at the wrong point can completely destroy the integrity of the system. My advice on this is find a programmer /or team / that writes or has written banking applications. No offense to anyone here, but hiring some freelancer to design a banking system is completely insane.
Jestep, It's very detailed explanation. I agree with you on most. In my opinion, even $400k would not enough to build this kind of company. I think you need to find some legitimate and reliable funding company first. Explain them in detail about your business information, your future development strategies and what value added your company has comparing to competitors. So, before you start. Think twice. Research about it deeply.
Guys thank you for the advice and i have been researching what you guys told me to research. Some aspect were in my favour some were not.Iv decided as per Komrad's advice to find more funding. While i wait though i will be working on other projects.
it is very hard to start from the beginning and getting goodwill and fighting with paypal, etc.. try to see whether you can buy an existing offline banking/financial companies. then start online, as there will be exiting experts in that company. that's my idea.
The OP is located in South Africa and not in America. So $400K are well enough to start and keep him running. What he needs is few employees (may be 2 or 3 developers, technical assistants and sales men); I think $400K are enough to make him run for the first whole year, if he smartly invest his money. He doesn't need to build PayPal from Bottom to Top; he doesn't need to buy expensive ads... starting small and growing surely. MoneyBookers is not as advanced as PayPal (and even not near the feature and security PayPal offers) but has a small, moderate success and is growing taking profit on the mistakes/holes PayPal is making (like not supporting third world countries)