gh-bodangren-git-workflow-skills/prd-authoring/examples/02-research-example.md

title, type, status, created, updated

title	type	status	created	updated
Payment Gateway Integration Research	research	complete	2025-11-04	2025-11-04

Research: Payment Gateway Integration

Competitive Analysis

Competitor 1: Stripe

Overview Market leader in developer-focused payment processing with 40%+ market share among tech companies. Powers payment processing for millions of businesses worldwide including Amazon, Shopify, and Lyft.

Strengths

• Superior API design and documentation (rated #1 by developers)
• Supports 135+ currencies and 45+ countries
• Comprehensive fraud detection with Radar (machine learning-based)
• Strong developer ecosystem with extensive libraries
• Excellent uptime (99.99% historical availability)
• Built-in PCI compliance (SAQ-A eligible)
• Transparent, predictable pricing

Weaknesses

• Higher fees for international cards (3.9% + $0.30 vs 2.9% + $0.30 domestic)
• Limited phone support (primarily email and chat)
• Can hold funds for new accounts (rolling reserve for high-risk industries)

Key Features

• Payment processing (cards, wallets, bank transfers)
• Recurring billing and subscription management
• Payment method tokenization
• 3D Secure 2.0 and fraud detection
• Real-time webhooks
• Mobile SDKs for iOS and Android

Pricing Model Standard: 2.9% + $0.30 per successful card charge (US domestic), 3.9% + $0.30 for international. No setup or monthly fees.

Market Position Premium developer-friendly solution targeting startups, SaaS companies, and growth-stage businesses.

Our Advantage Over Them We leverage their strengths while they handle payment processing complexity, compliance, and fraud detection.

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Competitor 2: PayPal/Braintree

Overview Consumer payment giant with 400M+ active accounts. Braintree is PayPal's developer product. Strong brand recognition and customer trust.

Strengths

• Massive user base (400M+ PayPal accounts)
• Strong buyer trust and brand recognition
• Built-in buyer protection
• Venmo integration
• International presence in 200+ markets

Weaknesses

• Higher dispute and chargeback rates
• More complex API compared to Stripe
• Account holds more common
• Slower innovation

Key Features

• PayPal checkout
• Credit/debit cards via Braintree
• Venmo integration
• PayPal Credit (BNPL)
• Recurring billing support

Pricing Model PayPal Standard: 3.49% + $0.49, Braintree: 2.59% + $0.49

Market Position Consumer-focused platform with strong brand trust, prioritizing buyer confidence over developer experience.

Our Advantage Over Them PayPal's higher fees and complex integration make Stripe more attractive. May add PayPal in Phase 2.

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Competitor 3: Square

Overview Payment processor for small businesses and omnichannel commerce. Known for simple pricing and POS hardware.

Strengths

• Unified platform for in-person and online
• Simple, flat-rate pricing
• No monthly fees or commitments
• Fast payouts (next business day)
• Integrated POS hardware

Weaknesses

• Limited international support
• Fewer currencies than Stripe
• Less sophisticated API capabilities
• Higher fees for keyed transactions

Key Features

• Card processing (in-person and online)
• Square Terminal and readers
• Inventory management
• Invoicing and recurring payments
• E-commerce integration

Pricing Model Online: 2.9% + $0.30, In-person: 2.6% + $0.10, Keyed: 3.5% + $0.15. No monthly fees.

Market Position Small business and retail-focused, positioned as simple all-in-one for businesses needing both online and in-person.

Our Advantage Over Them Square is optimized for retail/POS, not pure e-commerce. Stripe's API-first approach suits our needs better.

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Market Insights

Market Size & Growth

Global digital payment market: $79.3B in 2020 → $154.1B by 2025 (14.2% CAGR). Growth drivers: e-commerce adoption, shift from cash, mobile wallets, subscriptions.

Primary segment: E-commerce businesses (SMB)

• Size: 2.1 million e-commerce businesses in US
• Growth rate: 15% annual growth
• Key characteristics: Need reliable, easy-to-integrate processing with low fixed costs

Market Trends

• Mobile wallet adoption: 25% of e-commerce transactions (up from 10% in 2020)
• One-click checkout: 40% abandon if they must re-enter payment details
• Buy Now, Pay Later: 300% growth since 2020 for purchases >$200
• Fraud concerns: $20B globally in 2021, driving demand for advanced detection
• Embedded finance: Payment processing embedded directly in software platforms

Regulatory & Compliance

• PCI DSS Level 1: Required for card processing; using tokenization (SAQ-A) reduces compliance burden
• Strong Customer Authentication (SCA): EU regulation requiring 2FA; 3D Secure 2.0 is table stakes
• Data privacy (GDPR, CCPA): Payment data subject to strict privacy regulations

Industry Standards & Best Practices

• OAuth 2.0 for API authentication
• 3D Secure 2.0 for SCA compliance
• Tokenization (never store card numbers)
• Webhooks for async events
• TLS 1.3 for encryption
• CVV verification for fraud reduction

User Feedback Analysis

Common Pain Points

1. Checkout complexity: 70% mention as pain point. "I filled my cart but gave up at the 8-step checkout"

   • Impact: 69.8% average cart abandonment rate

2. Payment method limitations: 40% request more options. "No Apple Pay, went to competitor"

   • Impact: 10-15% abandon if preferred method unavailable

3. Security concerns: 55% cite as top concern. "Don't feel safe entering card on small websites"

   • Impact: Trust badges increase conversion 20-30%

4. Re-entering information: 60% of returning customers frustrated. "Why can't this site remember my card like Amazon?"

   • Impact: Saved methods reduce checkout time 75%

5. Slow processing: 30% mention frustration. "Waited 10 seconds, thought it failed"

   • Impact: Each second reduces conversions 7%

Desired Features

Must-have (Table stakes)

• Credit/debit card acceptance (Visa, MC, Amex, Discover)
• Mobile-responsive checkout
• Secure processing with trust indicators
• Email receipt and confirmation
• Basic fraud detection

High-value (Differentiators)

• Digital wallets (Apple Pay, Google Pay)
• One-click for returning customers
• Guest checkout option
• Real-time updates during checkout
• Instant confirmation

Nice-to-have (Future)

• Buy now, pay later (Klarna, Affirm)
• Cryptocurrency support
• International currencies
• Subscription billing

User Preferences & Expectations

• Checkout speed: Complete within 60 seconds (2 min maximum tolerance)
• Payment security: Want trust badges, recognizable brands
• Guest checkout: 25% prefer not to create account first
• Save payment: 70% willing if they trust the site
• Mobile: 60% of traffic; expect wallet options
• Error messages: Want clear, actionable feedback

Technical Considerations

Competitor Technical Approaches

• Tokenization: All providers use it to avoid storing card data (SAQ-A vs SAQ-D compliance)
• Integration patterns: Hosted (easiest), Elements (balanced), API (most flexible)
• Webhooks: All use for async event handling (requires retry logic, idempotency)

Architecture Patterns

• PSP pattern: Use third-party provider vs building in-house

  • Pros: Fast deployment, reduced compliance, proven reliability
  • Cons: Dependency, transaction fees
  • Recommendation: Strongly recommended

• Event-driven: Use webhooks for downstream actions

  • Pros: Decouples payment from business logic
  • Cons: Requires robust event processing
  • Recommendation: Essential for production

Integration Requirements

• Stripe SDK: REST API + JavaScript SDK
• CRM: Salesforce (update customer records, orders)
• Accounting: QuickBooks (automated posting, reconciliation)
• Email: SendGrid (confirmations, receipts, failures)

Performance & Scalability

• Expected load: 1,000/month currently, 5,000/month in 6 months
• Performance targets: API <500ms p95, checkout <3s total, page load <2s
• Scalability: Stripe handles scaling, we need webhook queue for high volume

Technical Risks

• Stripe downtime: 99.99% uptime but would block all payments

  • Mitigation: Graceful degradation, monitoring, communication plan

• Webhook failures: Network issues could cause missed events

  • Mitigation: Stripe retries for 3 days, implement idempotency, poll as backup

• PCI violations: Improper storage could result in fines

  • Mitigation: Never store cards, use tokens, annual SAQ-A, security audits

• Fraud: Costs 2-3x transaction amount

  • Mitigation: Stripe Radar, CVV required, 3D Secure, velocity limits

Recommendations

Priority Features

Must-build

1. Credit/debit card processing - 100% of competitors have this, 80% of transactions
2. PCI compliance - Legal requirement, use Stripe tokenization for SAQ-A
3. Mobile-responsive - 60% of traffic is mobile
4. Basic fraud detection - 1-2% fraud rate costs 2-3x transaction value

Should-build

1. Digital wallets - 25% of transactions, converts 10-15% higher
2. Saved payment methods - 75% faster checkout, 30-40% higher repeat rate
3. CRM/accounting integration - Saves $100K annually in manual work

Could-build

• BNPL (Phase 2), Cryptocurrency (Phase 3), Subscriptions (Phase 2)

Technical Approach

Recommended: Cloud-native API integration with event-driven fulfillment

Key choices:

• Payment processor: Stripe (best DX, features, pricing, documentation)
• Integration: Stripe Elements (balances customization with ease)
• Backend: Stripe Node.js SDK
• Events: Webhook processing with queue (Bull/Redis or SQS)
• Database: Add payment_methods and transactions tables (metadata only, no card data)

Go-to-Market Positioning

"Complete your purchase in under 60 seconds with secure, one-click checkout - just like major e-commerce brands"

Target: E-commerce customers (B2C) expecting modern, frictionless experiences

Differentiators:

• 60 seconds vs 3-5 minutes competitors
• Amazon-like one-click for returning customers
• Multiple payment methods including Apple/Google Pay
• Enterprise security with consumer UX

Constraints & Considerations

Compliance: PCI DSS SAQ-A (cannot store card numbers)

Budget: 2.9% + $0.30 = $99K annually at 1,000 transactions averaging $275

• Acceptable given $1.8M revenue recovery

Timeline: Q2 2026 (6 months) - favors proven solutions

Resources: 2 FE, 1 BE, 1 QA - must use SDK/libraries, not build from scratch

Risk Assessment

1. Stripe dependency

   • Likelihood: Low, Impact: High
   • Mitigation: Monitor status, communication plan, backup provider Phase 2

2. Fraud/chargebacks

   • Likelihood: Medium (1-2%), Impact: Medium ($200-500 per incident)
   • Mitigation: Radar, CVV, velocity limits, 3D Secure for high-value

3. Integration complexity

   • Likelihood: Medium, Impact: Medium (delay or missing features)
   • Mitigation: Official SDKs, integration guides, schedule buffer

4. User adoption of saved payments

   • Likelihood: Low (60-70% industry), Impact: Low
   • Mitigation: Security messaging, trust indicators, incentives

5. Compliance violations

   • Likelihood: Low (following best practices), Impact: High (fines, loss of processing)
   • Mitigation: Never store cards, annual SAQ-A, security audits