SaaS companies that offer payment processing solutions must decide whether or not becoming a Payment Facilitator or engaging in a Payments Partnership is the more viable solution for their business. Neither option is “better” per se, the pros and cons of each must be weighed against your expectations for your business. First, we must understand what it means to become a Payment Facilitator (PayFac) or to engage in a Payments Partnership.

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.  

If you’ve considered becoming a Payment Facilitator (PayFac) for your SaaS customer base, you’re familiar with the term “KYC,” or Know Your Customer. As the payment processing industry continues its trend of explosive growth, however, KYC might be more accurately termed “CYA.”

As the idea of Payment Facilitation gains traction, more and more SaaS companies are exploring becoming a PayFac. Conceptually, it is an attractive feature to introduce: fast, easy, onboarding and new means of revenue generation. In fact, independent software vendors and SaaS companies are poised to generate $4.4 billion in revenue from payment processing alone by 2021.

There exists a number of issues that need consideration prior to becoming a Payment Facilitator or Payfac, however.  While the benefits of facilitation are clear, companies cannot overlook the essentials of selecting a facilitation partner. The nature of your partnership will be key in ensuring appropriate customer service, profit generation and risk or liability mitigation.

EXECUTIVE SUMMARY

SaaS platforms and Software vendors have a unique opportunity. Whether you already offer some type of payment collectionoption or have an application that has the potential to leverage payments there has never been a better time to explore your options.

Many SAAS platforms and developers choose their payment gateway integration partner[s] without considering the potential for the partner to actually help grow their business.