Who Can Become a Payment Facilitator?

The prospect of payment facilitator model implementation seems tempting and lucrative to many present-day companies. Classical ISO model is rapidly vacating the space to make room for the new type of entity: a PayFac. Concepts of full-fledged and white-label payment facilitator are gaining popularity with every coming day.

If we take a look at publications dedicated to becoming a payment facilitator, we can see that PayFac concept is often mentioned in conjunction with several particular categories of businesses. These businesses seem to have a head start over others when it comes to making money on payment facilitation services.

Why is that so? And what are these categories businesses?

Let us start with the second question. Here is the list of company types, for which it is somehow easier to become payment facilitators.

1) SaaS companies (as PayFacs) and users of their products and services (as sub-merchants).
2) Independent software vendors (as PayFacs) and their software users (as sub-merchants).
3) Investment companies and venture capital firms (as PayFacs) and startup businesses from their portfolios (as sub-merchants).
4) Franchisors (as PayFacs) and franchisees (as sub-merchants).
5) Online marketplaces (as PayFacs) and retailers using their platforms (as sub-merchants).

We do not add ISOs to the list, because, in contrast to the listed companies, their primary focus is already related to merchant services.

So, what do all these categories companies have in common?

1) They have established customer bases, on which they can impose certain rules and requirements.
2) In order to be able to service their customers, they have initial background verification (KYC) logic in place. Some even have ongoing monitoring tools.
3) Their customers are not necessarily the end users of products and services. They are often merchants (retailers, vendors) themselves.

The point is that these very features are necessary and common for payment facilitators as well. The listed companies do not have to implement them from scratch when they decide to follow PayFac model, because they already have them, at least in some rudimentary form. As a result, they have an advantage over other prospective PayFacs.

Of course, this does not mean that other companies cannot become payment facilitators. Especially, in view of growing popularity of white-label payment facilitator model which is an intermediary try-it-before-buy-it option. Its implementation involves much less upfront costs and responsibilities in comparison to the full-fledged PayFac model.

Do you think it is time for your company to become a payment facilitator? If the answer is positive, then you are welcome to download a free white paper on the subject. If you just need to know your situation, you can complete a short quiz. And if you need specific advice regarding your particular business case, you can request a free consultation with our payment experts at unipaygateway.com. Good luck!

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Enterprise-scale, open-source, #PaymentProcessing solutions for #Merchants, #PayFacs and PSPs. For more information, visit UnitedThinkers.com

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