Best Payment Tech Stack For Financial Industry in 2024

Nowadays the payment industry is changing at lightning speed. The introduction of cutting-edge technologies optimizes the way businesses provide transactions and transfer money. With Artificial Intelligence, Machine Learning, and cloud computing, financial companies improve the payment process and customer experience. 

The adoption of digital payments is also driving business growth and increasing the industry’s volume. Due to Statista data, total digital transactions will increase by 12.3% by 2027. According to McKinsey & Company, rapid growth is also expected in some emerging markets over the next few years, with projected CAGRs of 15% between 2021 and 2026.

Composition of growth in regional payments revenues, 2021-2026.

Source: McKinsey Global Payment Map

As a result, the active growth of digital payment methods opens up new opportunities for businesses to attract users and increase profits. Using innovative technologies you can create a financial application to meet customers’ and business needs. In this article, we highlight the modern payments stack that is driving the development of the financial industry and improving business efficiency.

What is a payment stack?

A payments stack is a set of technologies that are utilized to build payments software. It is a complex of programming languages, frameworks, and tools used to create a seamless commerce experience for businesses, financial institutions, and customers.

The finance stack describes the combination of all the technical infrastructure you need to develop payment solutions. These technologies allow making payment requests, offering P2P transfers, managing transactions, and currency exchanges.

Every step of a consumer’s purchasing process is covered by a payment stack, including the types of payments that are accepted and where transactions are sent for validation, processing, and settlement. Companies using new technologies accelerate financial operations, such as annual planning, accounting, reporting, and analytics, which are managed through automation capabilities.

Technology trends that are driving the payment industry

The payments industry is growing considerably and 2024  will be a year of launching a new fintech stack. Users need flexible cashless services, including digital wallets, real-time payments, and mobile banking versions. According to Statista, the largest fintech market segment is digital payments. It generated a transaction value of $4.4 million in 2020, an amount that is likely to double by 2024.

Therefore, the demand for digital transactions affects the spreading of the modern payment tech stack. There are several technology trends driving the financial business: artificial intelligence, machine learning, payment APIs, cloud computing, and robotic process automation.

Anti-fraud protection

In the financial sector, it is extremely important to provide a high level of security for all payments and banking services. To provide fraud prevention companies use AI and ML algorithms to analyze millions of data points, transaction parameters, and consumer behavior patterns in real time. It allows the detection of security threats and potential fraud cases. 

Machine Learning can be applied to payments to respond rapidly to known and emerging patterns of fraud, and to detect patterns of fraud that may not otherwise be identified. 

Artificial Intelligence and Machine Learning 

Artificial intelligence and machine learning are also used to perform high-volume transactions and anticipate online payment frauds. By processing multiple data sources in real-time, these technologies can allocate traffic to the best-performing combination of variables at any point in time. As a result, it helps PSPs optimize payment routing based on multiple parameters, such as performance, functionality, or pricing.

By using ML and AI algorithms for biometric authentication you can prevent identity theft. This tech trend allows you to improve business effectiveness and make performance more automated. For instance, the Japanese bank is going to cut about 19 thousand jobs by 2026 and replace them with AI technologies to be more efficient than its competitors and gain higher profits. It also helps to improve user satisfaction rate, providing better customer support service.

Improved mobile user experience

The mobile payment industry is rapidly increasing and it is expected to reach 4.8 billion by 2025. The main reason for its growth is the convenience of contactless payment methods such as mobile wallets, NFC, or QR codes. 

That’s why companies need to improve the mobile user experience and correspond to new requirements, providing a high usability level. Fintech UI design must be responsive and adaptable to different devices and platforms, ensure quick and smooth service, have clear and intuitive navigation, and provide effortless money transactions.

API-first software architecture

Payment APIs allow financial businesses to seamlessly manage transactions. This tech trend has the power to optimize payment processing for both companies and customers, making transactions faster and more secure. It makes it possible for one or more applications to interact and communicate with other programs, giving retailers more control over the payment experience.

The key benefits of API architecture are implementation capacity with third-party infrastructure, frictionless checkouts, enhanced security, and simplified compliance. Consequently, these technologies help your business offer multiple payment methods and quickly adapt to changes.

SDK.finance offers an API-driven platform for building digital banking and payment products. Our solution with 400+RESTful API provides integration and a wide range of features and functionality to jumpstart your payment business by building on top of it.

Cloud technologies

Cloud architecture enables businesses to get a cost-effective solution for financial data storage, ensuring high security and scalability levels. To eliminate infrastructure complexity, finance apps must support several platforms. 

Сloud technologies allow you to get benefits from the cloud-based models, cut infrastructure costs, and minimize maintenance problems. Additionally, you can easily upgrade or innovate scalable financial apps that make them more competitive in the rapidly changing market. 

Check this article to get more info about a hybrid cloud for banking services.

For instance, SDK.finance uses the hybrid cloud approach, that allows you to host the customers` data, while our team maintains the application functionality. It is a convenient and cost-efficient model for growing companies because you can use a cloud-based version or purchase a license source code to independently control the application for a one-time payment. 

Robotic process automation (RPA) and digital process automation (DPA)

RPA and DPA allow businesses to automate the payment process, saving their time and resources. These technology trends help to increase employees’ productivity and increase business process agility with intelligent automation.

Using robotic process automation (RPA) you can automate simple, repetitive tasks, while digital process automation (DPA) allows you to automate complex business processes from end to end, involving multiple departments, people, and job functions across the entire organization. 

The best tech stack for financial products

Fintech software development is a complex process that involves product requirements analysis, design, deployment, and maintenance of the financial system. 

Therefore, your team needs to focus on the most effective and relevant technologies to build a high-quality payment product. The finance stack includes the following technologies: programming languages, frameworks, tools, and other components involved in developing the application. 

Programming Languages

The technology platform HackerRank highlights the most effective coding languages in the financial sector: Python, Java, C++, C#, C, JavaScript, and Ruby. Before choosing the right one you need to consider the projects and business requirements. 

JavaScript 

• Lightweight,  object-oriented language with first-class features. 
• Has one of the largest package ecosystems with several tested libraries that work perfectly with currency, arbitrary precision, and number size. 
• JavaScript is also appreciated for its improved UI and UX, open-source nature, high performance and security, convenient data visualization, and speed of deployment. 
• Provides a high level of data protection, fraud detection, and powerful security management which is extremely important for financial applications. 

Python

• One of the most popular programming languages because it has a clean and easy syntax, offers a comprehensive ecosystem of open-source financial libraries, and provides a strong payment algorithm performance. 
• Python also works with data science, allowing developers to facilitate information exchange into fintech systems. For instance, Bank of America transformed its technology stack from unsupported components to Python. 

С++

• It is one of the oldest and most widely used programming languages in the world. C++ provides portability or platform independence which allows you to easily run the program on different OS and interfaces. 
• This coding language also provides a high level of scalability, running on a small scale as well as a large scale of data.
• C++ has a Standard Template Library that helps software developers save time, using templates, ready-to-use codes, and algorithms. It ensures a fast development process. In addition, C++ provides early error detection during the compiling process.

The most popular programming languages in the fintech industry

Python, Java, and C++ are the most popular coding languages in the financial and fintech industries. However, there is a difference in preferences between these spheres. For instance, Java is the most useful programming language for the finance sector, while fintech companies prefer Python development. 

Source: hackers.com

Frameworks

While programming languages are responsible for writing the code, frameworks give an application structure and environment. Frameworks serve as the foundation for fintech apps. We highlight the most useful frameworks for payment products:

Ruby on Rail 

It is a stable and secure framework for Fintech companies’ applications. This payment stack is often used for MVP development and reduces the development time by 25% to 40%. The main benefit of Ruby on Rail is in-build security, therefore, this framework provides a high level of data protection and hackers attacks.

Django 

It is a primary framework for FinTech app development services. It provides an intuitive interface and capabilities to create complex payment solutions. Django is a Python-based web framework that has a high level of flexibility and can quickly adapt your application to new financial regulations. This payment stack also allows easy integration with other systems, using REST APIs.

Vue.js 

It is a progressive framework for building user interfaces. It is not a secret that modern consumers want to use personalized services when making payments or sending money. A user-friendly interface is an essential part of a fintech application to provide convenient and accessible service with visualizations of financial data.

Vue.js framework is responsible for front-end development. It is a progressive open-source framework that is used for products with a high volume of users. Vue.js supports further development after validation and an extremely dynamic interface. SDK.finance uses Vue.js to provide a comfortable interaction with its payment product.

Read this article to explore 7 expert tips for successful financial software development.

Databases 

Choosing the right database is important for financial products. This element of the payments stack stores all payment data, transaction history, and customer information, providing your business with high performance.

PostgreSQL 

It is a powerful, open-source object-relational database system. It is the most popular stack for financial applications. PostgreSQL provides analytical capabilities and supports different coding languages: Net, C, C++, Java, JavaScript, Perl, and Python. The database has transparent data encryption that provides a higher security level for users. 

MongoDB 

It is a cross-platform document-oriented database program. It is a fast financial stack that allows for building highly scalable payment apps. The database creates document-based info models and stores data in addition to other formats, like Binary JSON. It provides faster database access, which makes it a suitable database for FinTech products. It is used by different software companies like Uber, LaunchDarkly, and SDK.finance to create fast and scalable products.

​​There are a number of technologies that are suitable for financial apps, however, the final payment stack depends on the requirements and complexity of the product. During the development process, it is important to prioritize the necessary features and functionalities of the application to choose the right programming language, database, and frameworks. 

​Read this article to get more info about developing a money transfer app.

Building payment products from scratch

Fintech software development is a difficult process because the payment industry is constantly changing, and requires additional attention to security measures. Therefore, your company needs to quickly adapt to new conditions and provide safety standards. 

Every fintech product has different requirements according to its features and functionality, but there is a similar way to build a payment application. 

To create a high-quality payment product you need to focus on the following steps: 

1. Analyze the requirements of your product

It is essential to gather requirements before starting the development process. You can launch your business with MVP (minimum viable product), saving time and resources. This step also helps to prioritize the features and implement necessary functionalities for the future product. 

2. Provide regulatory compliance

The payment industry is strictly regulated in most countries, that’s why you should ensure that your financial application is compliant with the current legislation. There are different types of compliance for payment processing companies: identification standards, data protection standards, and other financial regulations.

For example, PCI-DSS (Payment Card Industry Data Security Standard)  helps merchants and payment processors securely store financial information and transfer data across the Internet. It is also essential to provide KYC regulations for customer verification, including biometric-based identity and digital document validation. 

3. Hire a development team

To build a high-quality payment product you need to find a professional development team with experience in the fintech industry. However, hiring technical specialists is a difficult and time-consuming process, so be ready to devote a lot of time to talent acquisition. 

4. Create a convenient UX/UI design

It is also important to create the user interface and brand identity for your product with the graphics designers. Providing a user-friendly digital experience is a key development trend, therefore, you need to focus on intuitive navigation and usability, removing friction from the customer journey. 

Customer support is an important part of the user experience in the financial sector. Generation Z is looking for personalized service therefore, payment services use AI and other technologies to optimize the customer experience.

5. Develop and test the payment software

Building and testing are the most essential steps in the development process. Using a modern payment stack for your financial product you can get an efficient and convenient app. Your tech specialists also need to provide fundamental software testing to ensure the security and performance of your application. Read this article about reducing FinTech app development costs. 

Using a payment platform by SDK.finance 

SDK.finance provides you with a core payment platform for building your own financial product on top. Using the cutting-edge technology stack, our team can help you to build scalable payment solutions: digital wallets, neobanks, marketplace payment solutions, or money transfer apps. 

We use the modern financial stack to provide the latest security standards in code development. The backend of the cloud-based software by subscription is hosted on popular cloud platforms and maintained by our team. The databases are stored on your servers and managed by your own team. It helps to meet the data management regulatory requirements for any country and enables the usage of our platform irrespective of location.

Implemented REST and gRPC API architecture helps to facilitate integration with third-party providers and services and assists in driving your banking or payment product innovation.

As a result, with SDK.finance you can accelerate product launch, address regulatory compliance issues, reduce development costs, and fuel innovation using our subscription-based FinTech software with the hybrid cloud delivery model.

Wrapping Up

Choosing the right payment stack is an important step in the fintech software development process. This choice depends on the functionality and features of your payment product, so you need to analyze the requirements for it before starting work. 

You can develop the financial software from scratch or choose a professional team to build the application, saving you time and resources. 

SDK.finance provides you with a fintech platform that offers scalable infrastructure and security-build design. Customize our ready-made solution and build on top of it.