The number of SaaS companies looking into payment processing on behalf of their customers is growing rapidly. More and more companies are looking at Payment Aggregation | Payment Facilitation as an attractive option to provide a service that offers fast, easy onboarding for their customers and generate new revenue streams in the process.
In fact, the payments business has grown 88%, with independent software vendors and SaaS companies poised to generate $4.4 billion in revenue from payments by 2021.
There are a number of considerations before making the decision to become a Payment Facilitator (Payfac). While fast onboarding and the potential for additional revenue that goes with becoming a Payment Aggregator is attractive, it’s important to choose a Payment Aggregation partner that positions you to provide the best service to your customers and generate profit, while also mitigating risks and reducing liability.
Following is a checklist of criteria to look for as you’re evaluating potential Payfac partners.
1. They don’t simply rely on out-of-the box integration solutions for software application payment integration clients. Instead, look for a partner that has examined every aspect of the application’s requirements, culminating in a proposed path for a successful payments integration.
2. They understand and value the fact that your clients rely on their payment integration as a profit tool. The Payfac partner you choose should provide possibilities based on your SaaS application’s requirements and strike a balance between profitability and reducing price friction. They should be able to help you establish a solid planned agreement for residual profit.
3. They understand your user base. There is no one-size-fits-all solution. Choose a payments partner that can help you customize your Payfac service to meet the needs of your users and meet the specific needs of your business model (handling recurring billing, for example).
4. They understand payment compliance. Payment Card Industry Compliance is one of the most important criteria for Payment Aggregators to understand. It’s also one of the most complicated. PCI is a set of security standards that all companies must comply with if they accept, process, or store consumers’ credit card information. The PCI Security Standards Council has outlined 12 specific requirements and each is meant to ensure that companies handling consumer credit card information maintain a secure environment. It’s crucial to ensure that your potential Payfac partner understands PCI compliance in order to protect your company from penalties or the potential termination of your card acceptance agreement.
5. They offer an ACH option for recurring billing. Providing an ACH payment processing solution gives your customers an additional option for accepting payments, as well as providing other benefits. And if your SaaS product offers recurring payment functionality then ACH transaction integration is a critical tool that will help you minimize credit card declines. Decline rates, which currently average 15%, can hack away at your profits and cause frustration. In contrast, ACH payment processing return rates are typically less than 2%. You don’t want to chance losing 15% of expected revenues, or deal with the hassle of contacting customers to update their billing information.
6. They support channel setup and management. If you’re not working with one of the larger players in payment processing, such as PayPal or Stripe, onboarding for accepting payments won’t be immediate. Of course, the benefit in choosing not to work with a big name provider is that you get to keep more money from payment transactions. Make sure the provider you choose to work with offers adequate support during your initial setup and onboarding, and has a solid and proven customer service reputation.
7. They can explain potential liabilities and risks. Liability fears, coupled with fast onboarding, are major reasons why many SaaS companies choose to partner with big-name aggregators such as PayPal, Stripe and Square. The Payment Aggregation partner you choose should be able to clearly communicate to you the risks involved in payment processing, including fraud loss, chargebacks and non-payment, as well as your options for mitigating those risks.
When looking for a Payfac partner it’s important to ensure the one you choose can help you meet the specific needs of your SaaS business. The partner should gather ample information on your company in order to tailor the right payment facilitation solution, that will meet, and ideally exceed your requirements.
For more than 17 years, Agile Payments has been providing integrated payments solutions to businesses. If you’d like more information about the variety of payment facilitation options available and which might be best for your company, contact us today.