As a business owner operating a software platform, you’ll know how important it is to keep your customers and your revenue growing. Between endless strategizing, new services and products, and constant promotion, you’re never short of ways to help your business grow – but sometimes, solutions that offer growth can be simpler and quicker than you think.
One of these solutions is PayFac as a Service – a service that allows you to create not only a brand new revenue stream but could see your customer base increase hugely through the way that it streamlines and simplifies customer onboarding.
But what is Payfac as a Service, and how could it operate for your business? Join us as we take a look, and discuss how it could help your business go from strength to strength.
Payfac As A Service
Payfac as a Service (also known as Payment Facilitation as a Service, or Payment Facilitation/Payfac) not only increases the ease with which you can instantly onboard new customers but also allows you to monetize payments. With Payfac, your platform becomes, in essence, a master merchant account, with the capacity to instantly set up sub-accounts for platform users.
Your users can start accepting payments from debit/credit cards (as well as, in certain instances, ACH), pretty much instantly after completing a basic application. In doing this, they’re able to circumvent the standard lengthy times and procedures they have to endure to apply and be approved for a merchant account – onboarding is instant.
This has, naturally, huge advantages for your business. With lightning-quick onboarding, your potential customers are much more likely to use your services than another provider whose application process is lengthier – meaning that your customer numbers will, naturally, increase. Also, the capacity to accept payments that your users gain leads to increased versatility of use for your customers. Payfac as a Service, in this case, can be an excellent choice for any platforms that specialize in business management, permitting them an avenue for payment acceptance that streamlines and helps their operations.
How Could This Work In Practice?
Let’s say that you operate a maintenance company, and you need a solution that allows you to manage payments, as well as all of the other logistics of your business, including keeping track of engineers, appointment management, and CRM – among others. The payment collection aspect of their operations is – naturally – hugely important, to keep their business afloat and to keep things incorporated across operations.
Previously, a company like this one would have to spend a large amount of time completing a traditional merchant account application – and, once they’ve spent the time doing this, they’d then have to wait for it to be approved – sometimes a matter of weeks. Once this is done, they’d then have to incorporate these credentials into their SaaS application – which is, unsurprisingly, easier said than done.
Through Payfac as a Service, though, the incorporation of payment collection can be within the app itself – all they have to do is sign up to the platform and, through this process, give their bank data and business info. The process is instant, collection of payments is enabled, and everyone’s happy.
Why PayFac As A Service Has Become A Viable Option
In the past, Payment Facilitation Solutions have only been accessible through a lengthy, in-depth application process. Of course, this process operates to reduce financial risk, due to the platform operating as the Payfac receiving the funding they need from sub-merchant processing – any fraud or dodgy activity, and it’s the PayFac provider that’s liable.
The time taken – as well as the cost needed – to integrate everything needed to operate in this fashion – processing, payment onboarding, risk analysis, etc. – was enormous. We’re talking 6 months on average, plus a huge expenditure in the first instance. There might even be Money Transmitter licensing obligations, depending on the nature of your cash flow – and that’s before any compliance expenditure or risk mitigation. Not super viable, right?
As such, PayFac as a Service has emerged through this need for a more streamlined, accessible, and cheap solution – and the market’s booming.
How PayFac As A Service Differs
With PayFac as a Service, you’re essentially a sub-Payfac – meaning that a ‘true PayFac’ takes on all of the notable infrastructure costs and regulation aspects that you need to operate effectively. Through the true PayFac, you’re given a platform to utilize the tools they offer, to generate customers and payment. Due to the true PaFac’s knowledge of your clients and their processing, you’re able to mitigate a large amount of financial risk while retaining functionality – the benefit of which, naturally, cannot be understated.
PayFac as a Service is also known as a Managed Payfac, or Hybrid Payfac. It works in the same fashion as a lot of cloud applications, in the fact that you’re harnessing the power of a developed solution, without having to outlay any of the money it’d cost to build it yourself. Unless your platform is significantly developed and needs the power of true Payment Facilitation, it’s simply not a viable solution for a lot of companies.
So, why would some businesses opt for it?
Well, there is one negative to PayFac as a Service which can be troublesome for some businesses – which comes in naming.
Let’s say that you have a business named “Top Medical”, and you’re a client of a platform that offers payment solutions. Now, if you were a true Payfac, your customers would see your name – “Top Medical” on their bank, credit, or debit card statement, without any alteration.
However, when you’re operating using a PayFac as a Service model, it’s a little different. If the Master Payfac you were using was called something like “Big Payment”, your customer’s credit card statement might read something like “BPM* Top Medical” (BPM standing in for ‘Big Payment’, in this instance).
How much this may be a problem for your business depends on your model and how much you’re concerned about naming, etc. But it is something to keep in mind.
It’s also worth bearing in mind that, as a true Payfac, you’re in charge of and own the payment process – as well as the customer you’re operating for, with no interference from anyone else. Again, this may be something that your business values – but it may not still be enough to sway you away from the ease that Payfac as a Service offers.
The Bottom Line
By using Payfac as a Service, you’re able to both drive customers and increase revenue for your business through an easy solution, both for yourself and your customers. Without the extra costs and work that a true Payfac solution can initiate, Payfac as a Service gives you all of the positives and little of the downsides.
For more information about Payfac as a Service or to discuss your integration needs further, contact Agile Payments today. With almost two decades of experience in payment integration, we’re able to give you the tools you need to help your business grow and prosper. Get in touch now.