Starting a finance business can be a rewarding venture, blending financial knowledge and tech skills with sharp business savvy. The market for mobile payment solutions is worth billions, with steady demand from retail shops, restaurants, and service providers who need flexible payment options.
This guide will take you through the practical steps of validating your business concept, securing funding, obtaining the right licenses, and building supplier relationships to help you launch a successful finance business in the U.S.
Step 1: Validate your business idea and plan your budget
First, confirm there is a real market need. You can survey local retail and restaurant owners about their current payment systems. Ask what frustrates them and what features they would pay to have. This direct feedback is more valuable than generic market reports.
Next, analyze your competitors. Use databases like Crunchbase or CB Insights to see who is getting funded and what they offer. You should also use their products to understand the customer experience firsthand. A frequent misstep is to build a product without first confirming businesses will pay for it.
Estimate your startup costs
With this in mind, you can map out your initial budget. Securing the funds for these items provides a clear financial roadmap. A typical investment for a mobile POS business can range from $37,000 to $110,000, which often includes:
- Legal and Licensing: $2,000 - $10,000
- Software Development (MVP): $25,000 - $75,000
- Hardware Prototypes: $5,000 - $15,000
- Initial Marketing: $5,000 - $10,000
Here are 3 immediate steps to take:
- Survey at least 20 local business owners about their payment processing needs.
- Create a feature comparison chart for your top three competitors.
- Draft a preliminary budget using the cost ranges provided.
Step 2: Establish your legal structure and secure licenses
You might consider forming a Limited Liability Company (LLC). It protects your personal assets and offers tax flexibility by letting profits pass through to your personal return, which avoids the double taxation you would see with a C-Corp.
An S-Corp is another route. It can reduce self-employment taxes once you are profitable, but it demands more administrative work like formal meetings and stricter record-keeping. A frequent misstep is picking a structure without legal counsel, leading to tax issues later.
Navigate federal and state regulations
With your legal entity registered, you can focus on licensing. If you transmit funds, you must register as a Money Services Business (MSB) with the Financial Crimes Enforcement Network (FinCEN). The registration itself is free but mandatory.
State licensing is the bigger hurdle. Most states require a Money Transmitter License, a process that can take 6 to 18 months per state and cost thousands in fees. You also must adhere to the Payment Card Industry Data Security Standard (PCI DSS) to handle card information securely.
Here are 3 immediate steps to take:
- Consult a business lawyer to finalize your LLC or S-Corp formation.
- Check your state’s Department of Financial Institutions website for its money transmitter rules.
- Review the PCI Security Standards Council website to understand compliance requirements.
Step 3: Secure insurance and manage risk
Key insurance policies
Your business handles sensitive data and money, so standard insurance is not enough. You will need a few specific policies to protect against financial tech risks. A frequent mistake is to only get general liability, which leaves you exposed to digital threats.
- General Liability: Covers basic business risks like property damage or client injury.
- Professional Liability (E&O): Protects against claims of negligence or errors in your service.
- Cyber Liability: This covers costs from data breaches, a major threat for any payment processor.
- Directors & Officers (D&O): Shields leadership from personal liability if the company is sued.
Expect to secure at least $1 million in coverage for both professional and cyber liability. Annual premiums for a startup can range from $5,000 to over $20,000, depending on your transaction volume and data security measures.
Find the right provider
General insurance agents may not understand your needs. You should seek quotes from providers that specialize in technology and fintech, such as Hiscox, Embroker, Coalition, or Chubb. They offer policies tailored to software and financial services companies.
Here are 3 immediate steps to take:
- Request quotes for a combined professional and cyber liability policy from two specialized insurers.
- Review your software development plan to identify potential error points for an E&O policy.
- Consult an insurance broker about whether you need D&O insurance at your current stage.
Step 4: Set up your office and choose your technology
Your first office does not need to be large. A small, flexible space of 200-500 square feet is enough for a founding team. You might consider co-working spaces to avoid long-term commitments and high initial costs. This keeps your overhead low while you focus on product development.
If you opt for a direct lease, negotiate for a shorter term, perhaps 1-2 years instead of the standard 5. Many startups make the mistake of locking into a long lease they quickly outgrow or can no longer afford. Also, ask for a tenant improvement allowance to help cover build-out costs.
Choose your technology stack
For your mobile POS hardware, you will need prototypes. You can source these from manufacturers on platforms like Alibaba or work with specialized Original Design Manufacturers (ODMs). A single prototype unit can cost between $500 and $2,000. Be wary of choosing a supplier on price alone as it can lead to quality issues.
Your software infrastructure will likely live on the cloud. Services like Amazon Web Services (AWS) or Google Cloud Platform offer scalable solutions. Budget around $500 to $3,000 per month for initial cloud hosting and developer tools, depending on your team size and testing needs.
Here are 3 immediate steps to take:
- Compare the monthly costs of a co-working space against a 2-year direct lease.
- Request prototype quotes and minimum order quantities from two hardware ODMs.
- Create a technology budget that includes cloud hosting and software licenses for your team.
Step 5: Set up your payment processing
Your revenue will come from subscription and transaction fees. You should outline these in a clear service agreement. Many new providers stumble with complex pricing. Keep it simple: a monthly fee plus a clear percentage per transaction works best.
For recurring monthly fees, Automated Clearing House (ACH) payments are cost-effective. For one-time payments like hardware sales or setup fees, you will need a way to accept cards, especially when you are on-site with a new client.
A simple way to get paid on the go
For finance businesses that need to accept payments on-site, JIM offers a streamlined solution. You can accept debit, credit, and digital wallets directly through your smartphone. Just tap and you are done.
At just 1.99% per transaction with no hidden costs or extra hardware, it is a great value. Other providers often charge 2.5% to 3.5% plus monthly fees. It is particularly useful for collecting initial setup fees from new clients in the field.
- Get Started: Download the JIM app for iOS.
- Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
- Access Funds: Your money is available right on your JIM card as soon as the sale is done - no waiting for bank transfers.
Here are 3 immediate steps to take:
- Draft a service agreement with simple, clear payment terms.
- Research ACH processors for handling recurring subscription fees.
- Download the JIM app to prepare for on-site client payments.
Step 6: Secure funding and manage your finances
Explore your funding options
Traditional bank loans are often a tough sell for early-stage fintech startups. Instead, you might want to focus on angel investors with a payments background or venture capital firms that specialize in financial technology. They provide capital and often bring valuable industry connections.
A frequent misstep is to secure just enough for development, leaving no buffer. You should aim for enough working capital to cover at least six months of operations, which could be $50,000 to $150,000. This gives you runway to build and test your product without constant financial pressure.
Look into government-backed loans
The SBA 7(a) loan program is another solid route. You can borrow up to $5 million, though most fintech startups begin with smaller loans. Expect interest rates between 11.5% and 15%. To qualify, you will need a strong business plan and a personal credit score above 680.
You can also pursue grants like the Small Business Innovation Research (SBIR) program. It funds R&D for tech-focused businesses. These are competitive, but they are non-dilutive, meaning you do not give up any company equity.
Here are 3 immediate steps to take:
- Identify five fintech-focused angel investors or VCs on AngelList.
- Draft a six-month operating budget to determine your working capital needs.
- Check your eligibility for an SBA 7(a) loan on the SBA website.
Step 7: Hire your team and set up operations
Build your core team
Your first hires should be a Lead Software Engineer and a Product Manager. The engineer builds the core product, while the product manager ensures it meets market needs. Expect salaries from $130,000 to $180,000 for a lead engineer and $110,000 to $160,000 for a product manager.
A frequent mistake is hiring a sales team before your product is fully validated. You should focus on your technical and product hires first. This ensures you have something solid to sell when the time comes.
Streamline your operations
For project management, you might use Jira to track software development tasks. For team chat, Slack is the industry standard. These platforms help keep a small or remote team aligned without heavy administrative overhead.
While not mandatory at the start, a PCI Professional (PCI-P) certification is a strong asset for anyone who will oversee compliance. As you grow, a good benchmark to aim for is $150,000 to $250,000 in annual revenue per employee. This ratio helps you scale your team sustainably.
Here are 3 immediate steps to take:
- Outline job descriptions for a Lead Software Engineer and a Product Manager.
- Look into the PCI-P certification curriculum on the PCI Security Standards Council website.
- Create a project board in Jira to map out your MVP development sprints.
Step 8: Market your business and acquire customers
Focus on direct outreach and content
Start with direct sales. Create a list of 100 local retail shops and restaurants. A personalized email or a brief, in-person visit can be very effective. Your goal is to book a demo, not close a sale on the first touch.
Many new founders pour their budget into broad ads. A better approach is to build a content engine. Write blog posts that solve real problems for merchants, like "How to Reduce Chargeback Fraud" or "Choosing a POS System." This builds trust and attracts qualified leads over time.
Use targeted digital ads and events
Once you have some traction, you can experiment with paid ads. LinkedIn is a strong channel where you can target users by job title, like "Restaurant Owner," in specific geographic areas. This keeps your spending focused and efficient.
Keep a close eye on your Customer Acquisition Cost (CAC). In B2B fintech, a CAC between $500 and $2,000 per customer is common. If your costs exceed this, you may need to refine your audience or message. Also consider attending industry trade shows to meet potential clients face-to-face.
Here are 3 immediate steps to take:
- Build a target list of 50 local businesses for direct outreach.
- Outline three blog post topics that address common merchant pain points.
- Draft a sample LinkedIn ad targeting a specific business owner profile in your city.
Step 9: Develop your pricing strategy
Your pricing model directly impacts revenue and customer adoption. Most payment providers use a flat-rate, tiered, or interchange-plus model. A flat-rate fee, like 2.75% per transaction, is simple and attractive to small businesses. It is often the easiest to market.
Set your transaction and subscription fees
Your profit on transactions comes from the margin above interchange rates, which average 1.5% to 2.5%. A common strategy is to set a flat rate around 2.9% plus $0.30, giving you a margin to work with. Many new providers make the mistake of competing only on price, which is rarely sustainable.
You should also add a recurring monthly subscription fee between $30 and $99 for software access and support. This creates a stable revenue stream. For hardware, you can sell it at a one-time cost with a 20-30% markup or lease it to lower the upfront cost for merchants.
Analyze competitor pricing
Review the public pricing pages of competitors like Square, Toast, and Clover. Note their transaction fees, monthly software costs, and hardware prices. This helps you position your offer. Instead of just undercutting them, justify your price with unique features or superior service.
Here are 3 immediate steps to take:
- Analyze the pricing pages of three direct competitors to map their fee structures.
- Draft a simple pricing sheet with one flat-rate transaction fee and a monthly software fee.
- Calculate your potential profit margin using an estimated interchange cost of 1.8%.
Step 10: Maintain quality and scale your operations
Continuous quality control is not optional. You must maintain your PCI DSS compliance with quarterly network scans and an annual Report on Compliance (ROC). Many founders treat compliance as a one-time setup, which can lead to security gaps and fines later.
Measure your performance
You should track specific metrics to monitor service quality. These numbers tell you if your product is reliable and if your customers are happy. Aim for these initial benchmarks:
- System Uptime: Greater than 99.9%
- Transaction Success Rate: Greater than 99.5%
- Support Ticket Response Time: Under 2 hours
Know when to grow
Growth should be tied to clear milestones. Once you reach 500 active merchants or $50,000 in monthly recurring revenue, you should hire a dedicated customer support specialist. When you process over $1 million annually, it is time for a full-time compliance officer.
For managing customer relationships at scale, you might use a CRM like Salesforce. To handle subscriptions, platforms like Chargebee or Recurly can automate billing and reduce churn. These systems help you manage growth without letting service quality slip.
Here are 3 immediate steps to take:
- Set target goals for system uptime and transaction success rate.
- Define the revenue or customer milestones for your next key hires.
- Review the features of a subscription management platform like Chargebee.
Building a finance business is a detailed process, but you have the steps. The key is to balance tech development with real market needs. Your first customers will value reliability over a long list of features. You have a solid plan, now it is time to execute.
As you meet clients, getting paid should be just as streamlined. JIM turns your smartphone into a card reader, so you can accept payments for a flat 1.99% fee without extra hardware. Download JIM to handle your first sales with ease.
