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How to Build a PayPal-like Payment Platform?

Apr, 23, 2020
Alex Malyshev

PayPal is one of the earliest and better known digital payment systems used by consumers and businesses alike to make transactions around the world – online, through mobile apps, and in person. 

The terrific idea behind PayPal’s launch in 1998 was enabling people to “email money”. What started as a product without a definite use case and a market grew like a wildfire when it entered the eBay community. At the time, people had to mail a check for a purchase, wait for it to arrive and clear, and wait for an item to arrive. 

The already lengthy process was further complicated by lax fraud prevention measures, as a seller could simply not mail an item after receiving the payment. In stark contrast, PayPal let customers transfer money from their bank account to a seller PayPal account in hours instead of weeks and protected the money until the transaction was concluded. 

By enabling much faster direct and protected payments, PayPal grew from 10 thousand users in 1999 to 5 million by the summer of 2000. Now, the company is valued at over $125+ billion with many successful payment products like Braintree, Venmo, and Xoom under its wing. 

After 20 years of providing excellent service, PayPal continues to succeed for the same reasons – it provides faster and more convenient ways to pay for consumers and merchants alike. With digital payments increasingly becoming the norm, many people are wondering what does it take to build a digital payment platform like PayPal? 

Why do customers love to use PayPal? How does PayPal work?

One of the biggest advantages of PayPal is its low barrier to entry. Anyone can create an account and start using it in under 10 minutes. Compared to opening an account at a traditional bank or a financial institution that requires a visit to a physical branch and tons of paperwork, PayPal is much more convenient. All you need to do is sign up and input your information online – no lengthy queues and unnecessary bureaucracy. 

Connecting an existing bank account or a credit card is very easy. As a result, all types of businesses and everyday consumers have quick access to a broad payment ecosystem. From splitting a bill at dinner to selling products online, PayPal gives people the ability to send and accept money with just a few taps. 

Image source Pinterest

Once you set up a PayPal account with your bank account or credit card, you can keep using it wherever you shop. Instead of entering credit card information time after time, all you need to do is log in with PayPal to make a purchase. Not only does this save you time, but it also keeps your bank information safe during transactions. 

Retailers, e-commerce stores, and even restaurants who use the platform can attract customers with faster checkout, giving them an advantage over their competition. But that’s not the only benefit for business owners. PayPal’s merchant services are a fantastic way to keep things organized. 

Image source PayPal official website

Tracking orders, generating sales reports, and keeping track of invoices is easy with PayPal. Furthermore, the system’s flexibility lets merchants set up new payment links and buttons in virtually any situation. While those tools provide a great foundation, PayPal also has partnerships with many third parties to help you grow and manage your business. 

From website and store builders like Squarespace, Wix, BigCommerce, and Shopify to partners like Magento that enable you to further develop your business, multiple quick and easy integrations make Paypal a one-stop-shop solution for many companies worldwide. 

Despite how popular and commonplace online shopping has become, concerns over the safety of consumer data and payment information remains as relevant as ever. PayPal’s solution is to act as a mediator between buyers and sellers to resolve disputes and any order discrepancies. Although the resolution process may take some time, it is good to have an additional security layer to prevent fraud.

These features make digital payment platforms like PayPal incredibly attractive to customers and merchants for their functionality, convenience, and user-friendliness, all of which stem from the versatility of PayPal’s core payment system.

PayPal in numbers

305 million active accounts

22 million active merchant accounts

$17.8 billion in total revenue in 2019

12.4 billion payment transactions in 2019

Supports 100+ currencies 

Available in 200+ markets worldwide

Why is there a demand for payment platforms like PayPal? 

According to McKinsey, the global payment market revenue in 2019 was $1.9 trillion and is expected to grow by 6% per annum to $2.7 trillion in 2023. Customers are increasingly turning to nonbank financial providers like PayPal for functionality traditional banking services do not provide. 

The incumbent banking system relies on physical branches to open accounts, make transfers, and service customer requests, which is highly prohibitive for some customer groups. Those in rural areas or those working long hours have to make special arrangements to travel to a physical branch only during office hours just to make use of their account. Even then, traditional banks cover their high overhead by passing the costs onto the consumers in the form of high and unexpected fees. 

Payment providers, in comparison, offer unparalleled convenience and transparency. With just a smartphone, customers can interact with their money whenever and wherever they want. For example, consumers use PayPal for cheaper and often free account-to-account (A2A) payments that are quickly rising in popularity in Europe and Asia. Low and transparent fees are easy to understand and enable customers to reap the benefits of vast financial ecosystems. 

Quick loan approvals and a myriad of business management tools and integrations make payment providers like PayPal vastly more beneficial and cost-effective to merchants when compared to traditional payment providers. As the conventional sources for growth in retail payments change and become more digital, the market will shift towards payment providers who rely on efficient technology infrastructure to deliver superior features to consumers.

The reason why traditional providers like banks cannot implement new functionality lies in their closed legacy systems that require a lot of time and resources to upgrade. Some of them are struggling to integrate even the most basic functions like currency exchange. Modern payment platforms, on the other hand, rely on a much more flexible and stable API first architecture to roll out new features in a fraction of the time.

These factors make payment platforms like PayPal attractive not only to underserved customers but to those with accounts at traditional banks because they can drastically increase their payment options in under 10 minutes.

How to develop a PayPal alternative? 

PayPal was built and rebuilt multiple times over the last 20 years. Although building a payment platform is a complicated process, here we highlight the most vital components which are mandatory to create a payment platform similar to PayPal. 


The most crucial part of every digital payment platform is the core platform. The platform is the engine behind the creation and management of accounts, balances, transactions, journal entries along with the storage of client data, receipts, and other reporting tools.

A good core platform relies on composable architecture connected by APIs that allows to decouple distribution channels, products, and client data. This particularly agile architecture enables to make quick changes while providing a continuous digital customer experience.

Onboarding, payment processing, and KYC services have to then be integrated into the platform. Developing a core platform in-house is a complicated and time-consuming process that can overwhelm teams and delay product launch. As such, very few payment providers have their own platforms. 

Many PayPal alternatives have outsourced their core payment platforms from FinTech providers. New cloud-based platforms with pre-integrated key features help to assemble best in class products and launch them at a much faster pace and lower capital expenditure. 

100% dedicated team

It is hard to overstate the importance of finding the right team for developing a digital payment platform like PayPal. A team should consist of people who are genuinely invested in seeing your vision through to the end. A development team should resemble a special forces squad on a mission. Their success stems from a shared responsibility, trust in each other, and a lack of doubts about their purpose and goals. 

A small team that can have the following structure:

Vision & growth hacking

Developing and sharing your vision with your team will help them understand what they are working to achieve and encourage them to work with passion. PayPal’s first goal, for example, was to determine their use case and find an opening in the market which they achieved by adapting their product for eBay.  

Using a growth hacking strategy, you can then deliver your unique vision to consumers. This scientific approach consists of choosing and testing a single hypothesis at a time to see whether it works or not. Pick a new idea or a feature, launch it, then document and analyze the results before proceeding to the next iteration. 

Growth hacking is especially appealing to startup founders because it focuses on rapid growth. Although some results may turn out to be complete failures, other experiments can bring out the winning strategy for exponential growth. 

Quick features delivery

For a startup with limited resources to succeed in a new market, it needs to innovate much faster to outperform the competition. Rolling out new releases is vital to providing customers with a superior product, precisely what PayPal has been doing. 


Compared to a traditional payment provider’s app that has only a few updates in one year, PayPal released a new version every few weeks. Check your local bank’s app, and you will see a similar story. PayPal’s constant iterations and fixes allow it to continuously please its growing customer base and stay ahead of the curve. 

The problem with traditional payment providers is that the journey from an idea to a rolled out feature can take months and even years. The same idea can be implemented by a payment provider running on modern technology infrastructure in weeks. 

The difference lies in the whole business processes and product development lifecycle. The payment provider as a product is based on its core platform, and in most cases, this component is the main barrier for the implementation of the new WOW-features that customers love.

What white label core payment software is available on the market today to build a PayPal alternative?

There are many more worthy next-generation FinTechs competing in the payment services market. and their white label core payment platform has been particularly successful at leveraging modern tools to help companies launch their payment systems quickly and easily. offers a highly secure and mobile-ready white label payment platform to build a PayPal-like solution and take the lead in the digital payment world. 

The core payment software with a strong API layer for FinTechs and startups consists of 5 main components: a back-end wrapped in 400+ API endpoints, 3 front-end frameworks, and web for system management with iOS and Android capabilities for our clients. 

Advantages of software built on API-first architecture:

  • Much faster release of new features and functionality 
  • More economical cost of ownership 
  • Fewer bugs and more stable products 

Visit the Core Payment Software product description page or contact directly if you are looking for a solution to develop a FinTech app like PayPal.


Can I create my own payment gateway?

With your own payment gateway, you can customize and add new features depending on your business needs and requirements. Offer Payment Gateway Products – You can offer and sell your payment gateway as a product to other merchants, ISOs, and Agents.

How does a payment gateway make money?

Every transaction that is successfully routed through the payment gateway infrastructure is charged with a transaction processing fee known as the Transaction Discounting Rate, or TDR, expressed as a percentage of the transaction value. The TDR differs based on the mode of payment selected by the customer, such as credit/debit card, Internet banking, digital wallets like Paypal, or prepaid wallets like Paytm and Amazon Pay. Some payment gateways offer a model where a fixed monthly fee is charged apart from the TDR – however, the TDR is lower in this case. This model is suitable for businesses with higher volumes of transactions. Other payment gateway models involve no fixed rates but a high TDR.

Can I create my own payment gateway?

There are many more worthy next-generation FinTechs competing in the payment services market. and their white label core payment platform has been particularly successful at leveraging modern tools to help companies launch their payment systems quickly and easily. offers a highly secure and mobile-ready white label payment platform to build a PayPal-like solution and take the lead in the digital payment world. The core payment software with a strong API layer for FinTechs and startups consists of 5 main components: a back-end wrapped in 400+ API endpoints, 3 front-end frameworks, and web for system management with iOS and Android capabilities for our clients. 

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