Agile Payments Blog

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3 Sure Signs that becoming a Payment Facilitator IS NOT for Your SaaS App

Mar 18, 2019 12:24:00 PM

Payment facilitation or payment aggregation allows one entity, the master merchant, to process or facilitate payments for a base of sub-merchants. For SaaS providers these are typically application end users or customers.


While revenue generation within a payment facilitation model is attractive, for many SaaS businesses becoming a Payfac is not the right choice. Timing, resources and industry knowledge all play into preparedness. As you explore this model, here are three key signs that your application may not be ready for facilitation.

  • 1-You can’t afford the initial PayFac startup phase

Preparatory investment around application development, legal, compliance, due-diligence and associated staffing can easily exceed $50,000 and is some cases, $100,000 on an annual basis.

  • 2-You don’t have a thorough understanding of payments; especially compliance and risk requirements.

There are staffing minimums to maintain basic monitoring around compliance and risk mitigation. Any business involved in payments faces risk of fraud, non-payment and reputational risk concerns. Not having defined processes that manage these risks on an ongoing basis makes for certain financial loss. Industry examples where payfacs have endured heavy financial loses exist – and these loses and financial obligations can mount quickly. Consider a sub-merchant that has a list of fraudulently obtained credit cards. If they debit $100,000 and you fund them, the likely stream of chargebacks and fraud claims ultimately become your financial obligation.

  • 3-You don’t have the right customer base profile.

In order to offset the initial and ongoing expenses, including the opportunity cost surrounding payment facilitation, processing must generate reasonable revenues. This means, your customer or client base must transact over a minimum threshold to warrant the investment.

As an example, if your margin is 0.3% on every credit card transaction and you have 500 customers billing $5,000 per month through your application, then your monthly revenue is just $7,500. Not nearly enough to justify the facilitation decision.

If your business is positioned to address the three basic Payfac hurdles above, then you may consider pursuing payment facilitation. If not, Hybrid Payment Facilitation may be an attractive alternative. As a Hybrid Payfac, you can experience many of the benefits of a traditional facilitation model, without the prohibitive front end and ongoing financial commitment.

To discuss Payfac or Hybrid Payfac options, contact the AgilePayments team.

Topics: payfac

Wayne Akey
Written by Wayne Akey

Wayne Akey works collaboratively with SAAS providers whose clients have recurring billing needs to create innovative payment solutions and new revenue streams. He has partnered with dozens of software providers to create integrated payment solutions that solve recurring billing problems and generate significant recurring revenue. He has experience in: ACH Processing | Payment Partnerships | Payment Gateway Integration | Credit Card Decline Mitigation | Payment Aggregation. Wayne is the author of “Explode SAAS Revenue by 84%: A Guide to Geometric Growth using Integrated Payment Processing”. To learn how your software application can become a billing solution for your users as well as generate additional revenue streams, contact Wayne today at We guarantee you will learn how to improve revenue per client by at least 10% or we will donate $500 to the charity of your choice.

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