What is Payment Facilitation as a Service?
Payment Facilitation as a Service, offers software platforms easy to implement payment solutions that both monetize payments and onboard new users instantly.
Basically the software platform acts as a master merchant and can set up sub-accounts for platform users instantly.
The application users complete a simple application and in minutes can begin accepting credit, debit cards as well as ACH [in some cases].
Becoming a Payment Facilitator or PayFac can be a great fit for SaaS platforms that offer a business management app. If there is a payment acceptance need, Payment Facilitation can provide a unique solution.
An example would be a SaaS platform that provides service providers a solution that helps them manage appointments, product inventory, driver route mapping, CRM and importantly, payments. The payment collection module is a part [ a very important one] of the SaaS platform offering.
In the past the service business owner would complete a fairly burdensome merchant account application, wait up to a week or more to be approved, and then somehow enter their credentials into the SaaS application.
In the last few years, payment providers have realized there's a sizable market for Payment Facilitator like solutions without all of the expense and hassle of becoming a True Payment Facilitator.
Being able to instantly onboard platform users creates friction free experience. This in turn makes it easy for users to board and process payments. Oftentimes this friction free experience can be used as client acquisition tool.
In the Payment Facilitation As A Service model you are in essence a sub PayFac.
Traditional Payment Facilitation involved the platform going through an arduous application process. Think of a home mortgage for 10 million $ and then double the hassle.
Integrating the payment onboarding, processing solution, risk, payout etc typically was a 6-month process.
How does the Platform make money from Payment Facilitation As A Service ?
Revenue is derived simply from the difference in buy rate from the processing networks and the sell rate charged to the end customer. For illustration, if a Payment Facilitator knows their true overall cost amounts to 2.4% of processed volume and they sell at 2.9% their margin is .5% of dollars processed. If they process $10,000,000 per day that works out to $50,000 in revenue per day.
In Payment Facilitation As A Service the platform shares in the payment processing revenue. Depending on many variable like existing user base, number of monthly payments, distribution channel and more ths revenue share can vary from 30 to 70% or more.
One More Option?
There is also a third alternative to becoming a sub Payment Facilitator while still being able to offer fast account set up. You may find a Third Party Processor with slick API’s for merchant account onboarding that offers a hybrid blend between traditional re-selling merchant accounts for a TPP and acting as a Payment Facilitator. Advantages are no risk, no support and much lower implementation costs. You still gain revenue benefits without admin burdens. It is unlikely you would be able to provision accounts as quickly as if acting as the PayFac, but this may be the best fit for you. Especially if you want to focus on your core product but realize payments can play an important role is business growth [and revenue generation].
In summary Payment Facilitation As A Service isn’t for everyone but that’s not what is important. The question is “Is it right for you”? That’s a question best answered by having a conversation with you guessed it: Agile Payments. Our strength is creating partnerships that help your business be more profitable.
Additional Payment Facilitation Resources