If you’re creating a product in fintech or payments, the “app” is the easy part. It’s the operating everything around it: security posture, regulatory scope, audit readiness, fraud controls, uptime, incident response, dispute handling, and the ability scale without breaking the ledger.
That’s why the best founders aren’t asking an Indian vendor, “Can you build a payments app?” They’re asking, “Can you build a payments system that survives audits, fraud spikes, and traffic surges — without creating compliance debt?”
The guide provides an overview of security, compliance, and scalability-related factors that you have to check while selecting the fintech and payment app development companies in India—along with some simple methods to test a vendor’s maturity level (not based on their portfolio).
A payment product can be subject to very different regulations based on what you are doing — acting as a payment aggregator, issuing a wallet, enabling UPI flows, building a lending interface for a regulated entity, or supporting cross-border payments.
When you neglect this step of categorization, the project generally crashes and burns later in one of two ways. Either (a) your vendor builds features that are prohibited or can not be authorized by your banking/PSP partners, or (b) you ship fast and then realize your architecture makes compliance (KYC logs, disputes, data residency, audit trails) ridiculously expensive.
Think about this early on: The type of product you are will determine which areas of compliance are “must have” and which are “nice to have.”
Two RBI anchors that often influence product design are: (1) KYC / AML needs (that apply to regulated entities and govern onboarding flows), and (2) payments data storage expectations (that impact hosting, DR, and vendor stack decisions). RBI has a Master Direction for KYC, which is periodically updated. RBI further issued guidelines on payment system data storage, which a lot of players in the payment ecosystem perceive as a design constraint as opposed to a legal footnote.
For founders beyond India, it’s one of the greatest surprises. RBI’s circular on Storage of Payment System Data is broadly interpreted as mandating that such data be stored “only in India” within a prescribed timeline, and RBI’s own FAQ references the directive along with its objective.
What it means in real-world architectural terms is simple: if you are building furniture in the payments system (direct or through partners) your vendor needs to be capable of designing for India-hosted storage and still operate a serious production system (monitoring, DR, secure logs, analytics). Weak vendors will suggest use of overseas cloud resources, third-party logging outside India, or “we will keep a copy in India” – and then you find that the model is at odds with your partner’s compliance posture.
A well-established fintech development company in India should be able to tell you clearly and without hand-waving how they manage: India-region databases, log retention, backups, key management, and DR — without sending sensitive payment data flying around outside the borders of those required jurisdictions. If they can’t tell you that in plain English, it’s a giant risk right now.
Provisions regarding the processing of digital personal data are laid down in India’s Digital Personal Data Protection Act, 2023 (DPDP), and certain obligations relating to the avoidance of harm in the processing of personal data are imposed on entities dealing with personal data. While the Act is more comprehensive than just enabling fintech, products in fintech nearly always handle sensitive personal data (attributes of identity, contact details, device signals, transaction metadata), making DPDP compliance part of your engineering workload.
And in practical terms, DPDP means that founders must actually do privacy engineering-consent/notice flows, purpose limitation, retention controls, deletion workflows, and vendor/sub-processor hygiene. Many founders think this is going to be “taken care of by legal later,” but with payments products, privacy and security are baked into the architecture decisions (where do logs live, how is identity verification stored, who can access support tools, how do you mask sensitive data in monitoring).
Even if you’re not looking to get “certified” in anything, the vendor should demonstrate they understand how to build privacy-by-design: sensitive fields encrypted, access control by role, audit trails, and data minimization. (If you also need a business-friendly DPDP summary for internal teams, large consultancies have released explainers outlining penalties and key obligations, but the Act is your primary source of truth.)
KYC is not just about gathering an ID document. The KYC in a regulated context is that you should be able to demonstrate at a later date what you did, when you did it, what checks you ran, and how you managed exceptions. Updated periodically, the RBI Master Direction informs how regulated entities undertake Customer Due Diligence and other related activities.
When you’re vetting a provider, listen for whether they think in “audit artifacts.” An excellent fintech engineering partner will talk about immutable logs, versioned consent, traceable KYC steps, and separation of duties (such as support agents are not able to casually access full identity data). A weaker vendor will just talk about UI and “upload documents,” and only once you’re further down the path do you find you have no way to explain decisions to your banking partner or auditors.
If you are building lending flows (even as an LSP/DLA partnering with a regulated entity), RBI has released digital lending guidelines and keeps FAQs on these. The point is not to say your app must be “RBI-compliant” on its own; it is to say your app can’t get in the way of your regulated partner’s compliance.
If your product deals with card payments at all, you’re going to need to deal with PCI DSS in some fashion. PCI SSC states that PCI DSS is a comprehensive set of technical and operational requirements that protect payment account data.
What founders need to understand is that PCI isn’t binary. Cost and complexity vary considerably based on whether you directly store/process/transmit cardholder data. The best architecture is usually the one that minimizes your PCI scope by leveraging tokenization and gateway-hosted fields so your backend never touches raw card numbers.
The vendor should be able to articulate this and architect the solution so sensitive card data remains in PCI-scoped components.
Also, note the time frame: PCI SSC announced PCI DSS v4.0 was retired on 31 Dec 2024, and v4.0.1 will be the supported active version. PCI SSC has also provided dates for when numerous new requirements become mandatory within assessments. A vendor who is still talking as though “PCI 3.2.1 is good enough” needs to get with the times.
Fintech is that security is not only about “stopping hackers.” It is also “stop fraud abuse at scale.” The infrastructure for digital payments in India is mind-bogglingly large—government statements have referred to UPI handling 20+ billion transactions in a single month with staggering total value (Aug 2025). At that point, even a tiny rate of fraud can add up to a large number.
That’s why authentication standards matter. RBI has previously stressed added authentication in some cases (an older RBI circular speaks to extra authentication for card-not-present transactions). In a more recent development, RBI has issued guidelines on authentication processes for digital payment transactions, and current information points towards an enforceable compliance date of April 1, 2026, with a stance that accommodates risk-based additional checks.
For founders, the “vendor check” here is not “Do you support OTP?” The question is whether the vendor has the expertise to architect a comprehensive, multi-layered fraud and authentication system that encompasses device binding, velocity controls, anomaly detection, strong session management, step-up authentication, and clean audit logs—while maintaining conversion rates.
Having such a timeline view ensures that you can understand why founders should be interested in “now” changes to security direction and standards versions when building in 2026.
Payment products are not evaluated solely based on the successful transactions. They are evaluated by what they do when things go wrong — failed transactions, delayed reversals, disputes, and chargebacks. RBI has introduced an Online Dispute Resolution (ODR) system framework for digital payments and mandated the authorized payment system operators to adopt ODR in a phased approach (with specific timelines mentioned in the communique of RBI).
That matters because your app needs to handle dispute workflows, reference IDs, users uploading evidence, and communication with customers. So many products in fintech fail this test because the founders built the “happy path” first, then realized the customer support team was completely unequipped, with no tooling, no traceability, and no defensible workflow on how to deal with disputes. The best vendors will build disputes into the product, not as an afterthought.
Most of the payment fraud takes place on the edges: compromised devices, malware overlays, rooted phones, session hijacking, weak deep-link handling, insecure local storage, and sloppy certificate pinning. If your vendor is creating the mobile apps, you want them to consider mobile security seriously.
OWASP MASVS is an industry best practice for mobile app security verification and a mobile app security checklist that is used as a reference by developers and testers to perform a security completeness review. OWASP also released a newer MASVS version with privacy-related categories (indicating the direction of travel).
You don’t need your vendor to “memorize OWASP.” You want them to build with these principles: secure storage, secure networking, robust auth/session handling, anti-tampering where appropriate, safe logging, and a repeatable VAPT process. An established fintech developer company will be able to adapt their security testing approach to be MASVS/MASTG style expectations rather than a single light pentest at the end.
Founders will enthusiastically ask vendors, “Are you ISO certified?” It’s not the question. The real question is, “Do you run your organization in a way that you could pass ISO 27001 even if you haven’t bought the certificate?”
ISO comments that ISO/IEC 27001 enables an organisation to implement an ISMS and apply risk management procedures which might be scaled in accordance with the organisation.
In practical terms, this means a vendor can demonstrate security policies, access control practices, incident response playbooks, onboarding/offboarding procedures, secure SDLC practices, and vendor risk management. You want to see proof that security is executed, not just blessed.
Payments are not like e-commerce. You can’t “go back and fix” money. You need to make your system right even in the face of retries, partial failures, network timeouts, and duplicate callbacks.
A payments-enabled vendor will have familiarity with concepts like idempotency keys, exactly-once-ish processing patterns (in practice: dedupe + ledger immutability ), consistent transaction states, and a double-entry ledger model of financial correctness. They also need to realize that decisions about risk and execution of payment need to be traceable and replayable for audits and disputes.
You can frequently spot a vendor’s level of maturity from how they discuss architecture. If they pitch “one database + one backend” for everything, they may ship an MVP, but you will pay heavily later. A typical scalable fintech architecture has ledger integrity separated from payment orchestration, fraud/risk, and event streaming so that spikes and backpressure don’t cause correctness to crash.
In fintech, “We’ll debug it when it breaks” is not OK because problems are quickly escalated to customer complaints and regulator headaches. A good vendor implements observability in the system: structured logs (sensitive data masked), metrics on each critical step (auth, payment intent creation, PSP response, webhook processing), distributed traces for debugging, and alerting tied to user impact (for example, transaction success rate is dropping, reversal delays are increasing, webhook queues are backing up).
This also relates to data residency and privacy: logging must be implemented such that no payment or identity data is leaked to third-party tools that increase the risk of non-compliance.
Fintech systems are expected to be online. But “high availability” is a budget and architectural decision. So the question is, which components need to be ultra-resilient (ledger, payment orchestration) and which can afford to have a slower recovery (analytics dashboards).
That’s where you set your RTO (recovery time objective) and RPO (recovery point objective), and then design DR around that.
If the vendor can’t explain DR in terms you can understand—how backups work, how often you test your restore, how you fail over, how you prevent split-brain writes—then you’re taking an operational risk, real and measurable.
In fintech, trust is won by artifacts. A more mature vendor can provide you with actual artifacts: redacted security test reports, secure SDLC checklists, incident response runbooks, a sample of how they store secrets and rotate keys, samples of how they handle webhook retries and idempotency, and samples of how they obfuscate sensitive data.
If they say, “We’re secure,” but don’t have a demonstrable, repeatable process, baby steps, it usually means you’ll be taking on the security burden in the future.
And for India payments, your vendor should be cognizant of RBI expectations on disputes/ODR, data storage direction constraints, and changes to the authentication direction (particularly in light of reporting to become effective as of April 1, 2026).
The safest way to build fintech is not build a giant “full platform” at once. The safest bet is to create a thin, production-quality slice that establishes correctness, security, and auditability early.
A good first slice often consists of: user onboarding with compliant logs, one payment flow end-to-end, webhook handling with retries and idempotency, ledger posting, dispute reference IDs, and simple admin tooling with role-based access controls. After that, you increase the product surface area.
This method also helps simplify vendor selection, as it requires the vendor to prove actual expertise in money movement and engineering related to compliance, not just UI speed.
One of the easiest signals of a weak fintech vendor is that they speak about compliance as if it’s a one-time checkbox. Standards change in the real world. PCI DSS follows version lifecycles with deadlines. Directions of RBI are evolving, and it may bring in new authentication regimes having clear, effective dates. If the vendor is not monitoring this as they build, you get “compliance drift.”
