What is Payment Stack?

What is ‘payment stack’? 

Payment stack is an industry phrase that describes the components – systems, software and services – needed to create a payments solution.  

It refers to the technologies and processes a business uses to accept payments from its customers. 

A payment stack covers every stage of the consumer purchasing journey, from where payment requests come from and type of payment, to where the transactions go to be authenticated, processed and ultimately result in settlement (the process by which the retailer receives their money). It can also include extras associated with the payment, such as loyalty schemes, member discounts or special offers, credit or subscriptions. 

It’s a concise way of describing the variety of methods, processes and stakeholders required to create an effective solution to process payments. Here, we take a closer look at what payment stack means.  


What does a payment stack consist of?  

A payment stack covers everything a merchant needs to take and process card payments, whether this is face to face (in-store), online, over the phone or using new systems such as order and pay at table apps. They are usually made up of several common elements which work together to create a frictionless experience for the end-user and join the dots between the merchant, the payment processor and the financial institution. Let’s have a look at the more common elements. 


Merchant onboarding 

Merchant onboarding is the process that connects a merchant to a payment processor. It involves the merchant submitting information about the business – often via an intermediary – to the acquiring bank to review and decide if they’re happy the merchant meets stringent compliance requirements and does not represent unnecessary risk.  

If the acquirer approves the application, it will issue a merchant ID, which must then be configured with its preferred terminal provider, payment gateway, logistics provider, help desk service provider and possibly even a hardware finance company. 

While the traditional merchant onboarding process is manual, paper-based, time-consuming and full of inefficiencies, Datam has pioneered a new approach to merchant onboarding using the latest technology in data harvesting and validation, workflow automation, decisioning and value chain orchestration. 

Datam’s innovative approach enables payment providers and their sales partners to streamline the entire merchant journey from initial enquiry to fully live merchant through automated processes and APIs to eliminate the manual procedures involved in the traditional process.  

As a result, merchants can be registered quickly, accurately, and safely by every relevant member of the distribution channel or value chain – in fact it can take less than five minutes. It’s called ‘Lead to Live in Five’.  


Fraud prevention 

While technology continues to evolve, so does the scale and risk of fraudulent activity. Hackers and cybercriminals are developing ever-more sophisticated ways to access payments data and commit fraud, with SMEs experiencing more data breaches than ever before. In 2019 alone, global card fraud losses topped £20bn. This increase in fraudulent activity has made monitoring and preventing criminal activity an essential component of any payment stack – especially in the sales and on-boarding process. 


Settlement and reconciliation 

As a merchant business scales up, the increasing volume of purchases they process can quickly become overwhelming. Payment reconciliation ensures that all payments received are recognised and handled accordingly. It helps merchants keep an accurate record of every payment and promptly identify any errors while preventing them from losing data or misplacing sales.  

Payment reconciliation can also be integrated with accounting software and other applications to provide the merchant with the real-time information they need to run their business effectively.  



Financial reporting services are a valuable part of the payment stack. Every company tied to processing card payments needs to record essential data for every transaction, including transactions activity (date, time, amount), and cardholder chargebacks, service fees, funding and commissions.  

These reporting components should be accessible at any time, in summary and detailed versions, so the merchant, its accountants or auditors and any other interested third parties have access to their key financial information when they need it.  


Payment Gateway 

Payment gateways allow merchants to connect to the companies that process card payments (known as acquirers).  Independent gateways enhance the acquirer’s services by consolidating payments information across different channels and even acquirers. Gateways are normally more agile and easier to work with than acquirers, allowing merchants to get up and running faster and at a lower cost. 


Checkout Interface 

From an end-user perspective, a good checkout interface is essential. It enables the merchant to provide a seamless purchasing experience by offering their customers everything they need to pay for their goods or services in the most convenient way to them.  


The importance of merchant onboarding in the payment stack 

Technology continues to drive rapid change in the payments sector. The market has shifted dramatically, with smaller, more innovative firms, like Datam, disrupting the status quo and bringing huge improvements to compliance and risk as well as sales and operational efficiency.  

This has created opportunities for acquirers, ISOs, ISVs and PayFacs operating in this space to attract and retain more merchants by offering innovative solutions. However, taking card payments is widely seen as a commodity service, and merchants still need a good reason to switch. It doesn’t matter how good your payment stack is. If the sales and onboarding process falls flat, you’re off to a losing start.  

Better merchant onboarding, from initial enquiry to live merchant account, is vital. That’s where Datam can help.  

We have developed our innovative technology platform to overcome the complexity and inefficiency of the traditional approach to selling merchant services and the frustrations they cause. We enable our customers to increase sales, improve efficiency, ensure compliance and enhance productivity.  

This goes beyond automation to the complex orchestration of every task involved in signing up new customers while ensuring compliance is at the forefront of every sales engagement. 


To find out how Datam can add value to your payment stack to help you stand out from the competition and attract and retain more merchants, get in touch today to arrange a demo