5 Challenges in Accelerating Development in Payment Processing Software
In a fast-evolving digital landscape, fintech companies are under constant pressure to deliver high-performance solutions, particularly in the domain of payment processing software. From navigating complex regulatory environments to managing rapid technological integration, payment processing requires a tailored approach to meet global and local demands. In a recent podcast episode of So You Think You Can Dev, industry experts discussed how fintechs can accelerate development and manage the challenges unique to this space.
Listen to the episode, or read the takeaways below!
Key Challenges in Payment Processing Software for 2025
1. Regulatory Compliance and Global Integration
Regulatory compliance is and continues to be a key challenge in fintech, especially when companies operate globally. Fintechs must comply with both local and international financial regulations, adding complexity to development cycles and time-to-market goals.
Abhi, Vice President of Corporate Strategy and Development of KMS Solutions, explains: “Fintechs face various challenges, from navigating complex financial regulations to finding and retaining skilled resources…these factors affect fintechs’ time to market.”
As payment processing software becomes more globally integrated, fintech companies must adapt to these regional regulatory requirements. Compliance demands significant resources and specialized skills, often delaying development timelines as companies work to ensure their solutions are legally sound across all markets.
2. Technology Integration with Legacy Systems
The fintech industry requires the integration of cutting-edge software with existing financial infrastructure, which includes legacy systems. Unlike newer companies, established players in the financial sector often rely on outdated systems, making seamless integration challenging.
Duy, President of KMS Solutions, emphasizes the importance of integration: “The payments landscape has evolved, with many companies offering APIs for integration… companies can focus on integrating with the best providers, saving time and resources while reaching users across borders.”
This integration need means that fintech developers must not only innovate but also ensure that new solutions are compatible with legacy technology, a process that can slow down development. Payment processing software must be flexible enough to interact with these legacy systems while still delivering a streamlined user experience. As such, software development teams must be sufficiently skilled in both new and old technology to effectively work in these systems, and this diversity of talent can be hard to find.
3. Talent Scarcity and Retention
The demand for skilled developers in fintech is high, especially those with expertise in areas like AI, machine learning, and blockchain. Even more so. the legacy coding languages are not taught to up-and-coming software developers, meaning that there is a shrinking pool of experts who can effectively address legacy systems. Retaining specialized talent is another challenge fintechs face, as high turnover rates can impact continuity and project success.
Duy comments on the importance of retaining skilled workers: “Good talent retention is a key challenge… Fintech execs can’t just be recruiters; they have to focus on product delivery.”
Retaining skilled talent is particularly important in the payment processing software space, where specialized knowledge is needed to navigate complex integrations, cybersecurity, and regulatory requirements.
4. Competition and User Retention
The payment processing software market is highly competitive, requiring fintechs to innovate and differentiate continually. In a world where digital transactions are the norm, customers expect seamless, secure, and integrated financial services. Meeting these expectations is critical for fintech companies aiming to retain users and grow their market share.
Fintechs may be facing increased skepticism from consumers, which can put additional pressures on acquisition and retention strategies. The collapse of Synapse has drawn public scrutiny to the fintech space, for example. Fintechs must put in more work to earn the trust of consumers and commit to security, compliance, and regulations.
Opportunities in Payment Processing Software
Despite the challenges, there are significant opportunities for fintech companies to capitalize on the demand for efficient payment processing software:
1. Leveraging AI for Cybersecurity and Fraud Detection
AI plays a transformative role in payment processing by enhancing cybersecurity and streamlining compliance. With real-time fraud detection and KYC (Know Your Customer) automation, AI allows fintechs to detect suspicious activity proactively, ensuring that their payment solutions are secure.
Abhi points out the benefits of AI in this context: “AI has been around for some time… It’s advancing cybersecurity by monitoring suspicious activity in real-time, which helps streamline processes like KYC.”
By using AI to automate routine tasks, fintech companies can focus on innovation and product development, reducing time-to-market for new features and improvements in payment processing software. Staying on top of emerging technology for fintechs is an incredible competitive advantage.
2. Integrating with Specialized Payment Service Providers
Today, fintech companies can benefit from existing API-driven ecosystems to accelerate development. Instead of building solutions from the ground up, fintechs can partner with specialized payment service providers (PSPs), allowing them to focus on their core competencies while outsourcing the heavy lifting.
Duy highlights this opportunity: “By integrating with established payment providers through APIs, fintechs can reduce time to market and reach new users across borders without needing to build the entire infrastructure from scratch.”
This approach enables fintechs to deploy payment processing software faster and scale to new markets with minimal friction, thus meeting global customer expectations.
3. Optimizing Cloud Infrastructure Costs
As more fintech companies move to cloud-based solutions, managing infrastructure costs becomes critical. The flexibility of the cloud allows companies to scale their payment processing software efficiently. However, it’s essential to monitor cloud expenditures closely to avoid high operational costs.
Abhi shares an example of cloud optimization: “One fintech recently faced significant costs due to cloud infrastructure decisions… they’re spending $1.75 billion per year on cloud infrastructure.”
Regularly analyzing cloud infrastructure costs and implementing optimization measures can help fintechs maintain a balanced budget, which is crucial for long-term sustainability.
You can see an example of costs saved with cloud optimization in this case study.
Key Strategies for Success in Payment Processing Software
For fintech companies to succeed in developing payment processing software, a strategic approach to talent acquisition, technology adoption, and partnership is essential:
1. Build a Skilled, Specialized Team
Given the complexity of payment processing software, companies should invest in highly skilled teams with expertise in AI, machine learning, and blockchain. This specialized knowledge helps fintechs manage complex integrations and navigate regulatory requirements effectively.
Duy explains the value of a strong foundational team: “Having core team members who are specialized and adaptable is crucial… You need people who can iterate quickly and who are well-versed in both traditional and new-age technologies.”
2. Partner Strategically to Meet Global Demands
The global nature of payment processing means that fintechs should seek partnerships with payment service providers to offer end-to-end solutions that meet local and international standards. By integrating with PSPs, fintechs can extend their services across borders and provide secure, efficient payment solutions for a broader audience.
3. Prioritize Cost Optimization in the Cloud
Cloud infrastructure is essential for modern payment processing software, but costs can quickly escalate. Fintechs should periodically review and optimize their cloud resources to ensure they’re getting the best value while scaling their operations.
Conclusion
The payment processing software landscape in fintech is ripe with both challenges and opportunities. Regulatory compliance, integration with legacy systems, and talent retention are just a few hurdles fintechs face. However, by leveraging AI, forming strategic partnerships, and building specialized teams, fintechs can accelerate development, enhance security, and expand their reach globally.
As the demand for seamless, secure payment processing solutions continues to grow, fintech companies are well-positioned to innovate and lead. By focusing on core competencies and optimizing resources, fintechs can deliver the high-quality, efficient software that today’s global market demands.
