White Label Payment Gateways: How They Work & When to Use One

Traditionally, when a customer wants to pay, they get redirected to a different platform, webpage or portal. This means the customer is forced to perform another step before they complete the transaction. But, what if you could offer them an experience where they stay right on your platform and complete the payment using their preferred payment method? 

This is exactly what white label payment gateways offer: a fully integrated and branded payment experience. In this article, let's understand what a payment gateway is, how it works, and how to choose the best one for your business needs.  

A white label payment gateway is a pre-designed and built, customizable payment processing solution that you can license and rebrand as your own. Instead of building a payment system from scratch, you can use a white label provider's existing infrastructure and technology, applying its own brand name, logo, and user interface.

A white label payment gateway connects to your e-commerce platform, website, or mobile application primarily through the use of Application Programming Interfaces (APIs) and Software Development Kits (SDKs).

The main selling point of a white-label payment gateway is that it lets customers make payments without leaving your platform. To understand how this works, let's see what happens when a customer initiates a payment: 

1. Branded checkout experience

The process begins on your platform (your website or mobile app). When a customer proceeds to checkout, they are presented with a payment form that is fully customized to your brand instead of being redirected to another platform.

2. Tokenization

As the customer enters their sensitive credit card information, it is immediately captured by the white-label gateway's secure server. The gateway's system instantly replaces the sensitive data with a unique, non-sensitive string of characters called a token.

3. Backend communication

Once the token is created, a series of lightning-fast communications takes place between your platform and the gateway.

Your platform's server sends a secure request to the white-label gateway's API (Application Programming Interface). This request includes the non-sensitive token, the transaction amount, currency, and a unique order ID. The request is authenticated using a unique secret key provided by the gateway. 

4. Authorization and approval

The white-label gateway sends the tokenized transaction details to a payment processor. The payment processor then sends the request to the relevant card network or payment network. The network sends the request to the customer's bank (the "issuing bank") to verify the funds and check for fraud. The bank then sends an approval or decline message back through the same channels.

5. Confirmation and settlement

The white-label gateway receives the final verdict (approved or declined) and immediately sends a real-time notification (called a webhook) back to a pre-configured endpoint on your platform's server.

Your platform's server uses this notification to update the order status in your database and display the final confirmation or error message to the customer on the branded checkout page.

The approved funds are held by the payment processor and are then transferred to your business's merchant account. This process is known as settlement, and it typically takes a few business days.

As we discussed earlier, white-label payment gateways work on a framework of APIs and SDKs. Here's how you can set it up: 

1. Onboarding and gaining access

You first sign an agreement with the white label provider. The provider gives you access to a dedicated developer portal. This portal contains all the necessary documentation, APIs, SDKs, and unique API keys for your account.

2. Technical integration and launch 

Your development team will log in to the provided developer portal. They will retrieve your unique API keys, which include a public key for frontend use and a secret key for backend use. They will then enter your API keys and configure the settings (e.g., enable specific payment methods, set up currency). The plugin handles the rest of the communication and data exchange automatically.

3. The frontend experience (What the customer sees)

The first step is to apply your brand's visual identity. The provider's portal or tools will allow you to customize the payment form or page. This includes:

• Uploading your logo.
• Setting your brand colors and fonts.
• Customizing the layout and flow of the checkout experience.

4. Testing in the sandbox environment

The white label provider will give you access to a "sandbox" or "test" environment. Your developers will run a series of simulated transactions using test credit card numbers provided by the gateway.

This is where you test every possible scenario: a successful payment, a failed payment, a declined transaction, a chargeback, etc. This ensures the integration is robust and that all parts of your system (your database, order confirmation pages) react correctly.

5. Go live 

Once testing is complete and you're confident in the integration, you can switch from the test environment to the live production environment.

Using a white-label payment gateway is ideal if you want to provide a professional, seamless payment experience without the huge investment and technical burden of building your own system. 

Here are the benefits of using a white-label payment gateway:

1. Enhanced brand trust and professionalism

By using a white-label solution, the entire payment process is branded with your company's name, logo, and colors. The customer never sees the name of the third-party provider. This creates a consistently branded and professional image that makes customers feel more secure and comfortable. 

Redirecting customers to an unfamiliar third-party payment page can cause hesitation and increase the chances of them abandoning their purchase. 

2. Cost and time savings

Creating a payment gateway from scratch is a massive undertaking. It involves hiring a team of specialized developers, security experts, and compliance officers, and can cost millions of dollars and take years to complete. 

A white-label solution allows you to get your branded payment system up and running in a matter of weeks. You just pay a licensing fee or transaction-based fees, which is a fraction of the cost of in-house development, maintenance, and infrastructure.

3. Reduced security and compliance burden

Handling sensitive financial data is a major responsibility with serious legal and financial consequences if not done correctly.

The white-label provider is responsible for maintaining full compliance with the strict Payment Card Industry Data Security Standard (PCI DSS). Since your platform never touches or stores sensitive credit card data (due to tokenization), your own compliance burden is dramatically reduced.

White-label providers also invest heavily in sophisticated fraud detection tools and machine learning algorithms to protect you and your customers from fraudulent transactions. 

4. Control and customization

While you don't own the core technology, you have a high degree of control over the customer experience. You can fully customize the look and feel of the payment form to match your brand's aesthetics.

You can also decide to enable specific features like recurring billing, multiple currencies, different payment methods (e.g., credit cards, digital wallets), and more. 

Not every business needs a white-label payment gateway, but if you are looking for control, branding, and flexibility, it can give you a stronger competitive edge. 

These are the types of businesses that should consider using one:

1. Banks and financial institutions: They can use white-label payment gateways to quickly launch their own branded digital payment platforms without investing years in infrastructure development. This helps them retain customer trust while offering modern and competitive digital services.

2. Fintech Startups: Fintech startups should adopt white-label gateways when they want to enter the market faster and avoid the cost and complexity of building a payment system from scratch. This allows them to focus resources on product innovation while relying on a compliant backend.

3. Marketplaces and E-commerce Platforms: E-commerce platforms can benefit from white-label solutions by offering a consistent branded checkout experience across sellers. They also get the ability to manage settlements with multiple vendors while keeping customers within their trusted ecosystem.

4. SaaS platforms: SaaS providers can use white-label payment gateways to embed payment processing directly into their products. This not only simplifies the user experience but also creates new revenue streams by enabling them to offer payments as part of their software services.

Choosing the best white-label payment gateway depends on your specific business model, target market, and technical capabilities.

Here are four of the most important factors you should consider when making your choice.

1. Security and compliance

This directly impacts your business's reputation and financial liability. A payment gateway handles sensitive customer financial data, so its security infrastructure must be impeccable.

The provider must be fully compliant with the Payment Card Industry Data Security Standard (PCI DSS). The most advanced level of certification is PCI DSS Level 1, which you should look for in any serious provider.

Also, look for built-in, sophisticated fraud tools. These can include real-time transaction monitoring, Address Verification Service (AVS) checks, CVV verification, and AI-powered risk scoring. 

2. Customization and branding

The primary reason for choosing a white-label solution is to maintain a consistent brand experience. The gateway you choose must offer extensive customization options.

You should have full control over the look and feel of the checkout page. This includes being able to apply your logo, brand colors, fonts, and layout. 

Beyond just the visual branding, evaluate how much you can customize the actual checkout flow and functionality. Can you easily enable or disable specific payment methods, customize fields, or integrate with your own business logic?

3. Integration capabilities and developer support

A good provider offers well-documented, clean, and modern APIs (like REST APIs). They should also provide robust SDKs (Software Development Kits) for popular programming languages and mobile platforms (iOS/Android). 

There should be a dedicated testing environment (sandbox) for your developers to simulate transactions and test all functionalities. 

Make sure to evaluate the quality of technical support. Do they offer 24/7 support? Is there a dedicated account manager? How responsive are they to technical questions and issues that may arise during or after integration?

4. Pricing structure and fees

Look for a provider with a clear and transparent fee structure. Be wary of hidden costs. Ask about all potential fees, including setup fees, monthly maintenance fees, transaction fees, and costs for refunds, chargebacks, and international payments.

Payment gateways typically charge a combination of a percentage and a fixed fee per transaction. Negotiate based on your projected transaction volume. For very high-volume businesses, a flat monthly fee might be more cost-effective than a per-transaction fee.

White-label payment gateways differ from standard gateways in terms of branding, the control they offer, costs you have to bear, customization options and more: 

Security is the single most important consideration when dealing with any payment solution, and a white-label payment gateway is no exception. Here are the primary security considerations you must evaluate with a white-label payment gateway.

1. PCI DSS Compliance

PCI DSS (Payment Card Industry Data Security Standard) is a framework of security protocols to ensure that all businesses that accept, process, or store sensitive card information operate in a secure environment. This is a non-negotiable requirement for any payment gateway.

A reputable white-label provider should be PCI DSS Level 1 certified, which is the highest level of compliance. 

2. Tokenization and encryption

A white-label gateway should use both tokenization and encryption to secure every transaction.

Tokenization replaces a customer's card number with a unique, randomly generated "token" that is useless to a hacker. From the moment data is captured, it should be encrypted using protocols like SSL (Secure Sockets Layer) and TLS (Transport Layer Security) to ensure it is unreadable while in transit. 

3. Fraud detection and prevention

Fraud is a constant and evolving threat in online payments. The gateway should use sophisticated algorithms, powered by AI and machine learning, to check every transaction in real-time. 

These systems can flag suspicious activity based on a variety of factors, such as unusual transaction amounts, location mismatches, or high-risk IP addresses.

• 3D Secure: An additional layer of safety and security that requires the customer to authenticate themselves with their bank (e.g., via a password, SMS code, or biometric scan).

• AVS (Address Verification Service): Checks if the billing address shared by the customer is the same as the one on file with their bank.

• CVV Verification: Confirms the three or four-digit security code on the back of the card.

• Blacklists and Whitelists: The gateway should allow you to create lists of fraudulent (blacklists) or trusted (whitelists) customers and card numbers to automatically block or approve future transactions.

If you are planning to integrate a white-label payment gateway on your platform, here are some things to keep in mind to keep the process hiccup-free. 

• Plan API Integrations Carefully: Map out how the gateway's APIs will connect with your existing systems, like ERP, CRM, or e-commerce platforms. A clear integration plan is what reduces errors and avoids delays during rollout.

• Test in Sandbox Environments: Always run transactions in a sandbox or demo environment before going live. This helps identify bugs, compatibility issues, or unexpected settlement delays.

• Focus on User Experience: Your checkout flow should remain simple, fast, and branded. A clean design, quick load times, and multiple payment options improve customer trust and reduce cart abandonment.

• Maintain Compliance Documentation: Keep RBI, PCI DSS, and other compliance certifications updated and accessible. This not only ensures regulatory readiness but also helps during audits and investor evaluations.

When it comes to embedding international payments into your business, you need a partner that delivers speed, reliability, and compliance without compromising on user experience. 

That's exactly what Xflow offers. 

Built for Indian businesses and global platforms, Xflow provides a fully white-labeled payments infrastructure that keeps your brand in focus while managing all the complexities of cross-border money movement in the background.

Here's what makes Xflow stand out:

• Seamless white-label experience: Xflow operates behind the scenes, so your customers always engage with your brand, never a third-party interface.

• Powerful, developer-first APIs: Everything, from user onboarding to transaction management, happens through APIs with no external redirection. Integration is simple, fast, and typically takes less than two weeks.

• Fast and reliable settlements: Funds reach your bank accounts in just one business day, with no hidden charges, delays, or bank follow-ups.

• Transparent FX and compliance: Rates are linked to mid-market benchmarks, and all transactions are handled through RBI-authorized banking partners with automated Foreign Inward Remittance Advice (FIRA) generation.

• Enterprise-grade safety: We work with global banks and leading technology partners to deliver fraud monitoring, regulatory compliance, and secure infrastructure.