How Your SaaS Platform Could Experience The Benefits Of Being a Payment Facilitator Without The Risks Or Expense
by Mashum Mollah Business 23 April 2021
There’s a lot to be said for payment integration. By embedding payment solutions directly into your SaaS platform, you create extra value for your users, gain further control of payments, and have the potential to create brand-new avenues for revenue for your business. And with the development in recent years of payment technologies, SaaS platforms have more options than ever before to integrate payments into their software – and naturally, each of these options comes with positives and downsides.
So how great would it be if there was a solution that incorporated the positives from these solutions, without incurring any of the risks or cost demands?
Luckily – you guessed it – there is. Payfac as a Service offers a smart alternative to traditional payment facilitation, giving SaaS platforms the ability to reap the benefits of Payfac solutions without having to go through the lengthy integration process that traditional payment facilitation requires. In this post, we’ll look at some of the positives of Payfac as a Service, and talk about why it could be right for your business.
With Payfac As A Service, Your Risk Is Less
With payment facilitation, you’re responsible for your sub-merchant’s processing and accounts. With this, naturally, you’re liable for a host of factors beyond your sub-merchant’s control. If, for example, each of your sub-merchant in the ofac sanctions list incurs a chargeback that they can’t pay for, or they’re a victim of fraud, it’s the payment facilitator (ie. you) that’s ultimately liable for the money. Furthermore, if payment facilitators take on fraudulent merchants, they, too, are liable for any losses incurred.
The management of all of these risks takes time, money, and resources, and unless you have the means to do so, it could overwhelm your business. With Payfac as a Service, however, it’s the provider of your payment that covers most of the security risks, compliance issues, fraud responsibility, and underwriting burdens. Your overall risk is much lower.
You Could Have A Higher Potential For Profit
If you’re a payment facilitator, you’ll earn a full 100% profit on all amounts over the cost to process payments. To put this into cold, hard numbers: if your SaaS platform has its cost per transaction at 2.5%, and they sell their payment processing at 3.0%, then they’ll earn a further .5% for every transaction made.
If you’re a payment facilitator with a sizeable customer base, it’s easy to see how quickly this can become a huge generator of revenue. But if your SaaS platform has a smaller user base (and let’s face it, there are a lot of them out there), it’s a fair possibility that the costs to implement and run the payment processing will outweigh the potential for revenue from the service.
However, by using Payfac as a Service, you still can control your pricing for the payments processing service you deliver to your customers and create new revenue streams without all of the enormous costs. This, eventually, means more profits for your business.
With Payfac as a Service, You’ll Pay Less
By embarking on your true payment facilitation journey, you’ll be committing to a huge amount of upfront investments. These could include (but aren’t limited to) underwriting requirements, certification, and various financial guarantees. With Payfac as a Service, these investments (and the time investments required) are far fewer, due to your payments partner taking care of the lion’s share of requirements. This, inevitably, means that you need to devote less staff to tasks related to payment processing, too.
It’s important to note that many payment processors run the risk of being termed as ‘money transmitters’ under a lot of state definitions if they process funds from customers to send these funds on to a sub-merchant. While this may not seem significant, ‘money transmitter’ companies are liable to adhere to extensive compliance terms. This can cost businesses hundreds of thousands of dollars in the first instance, with a yearly renewal fee that can be up to $125,000. And non-compliance can result in further penalties – criminal ones.
With Payfac as a Service, You’re Subject To Less Responsibility
Becoming a payment facilitator means that your liability to deal with compliance, fraud and human resources issues can suddenly skyrocket – there’s a reason why few companies can feasibly justify the cost of payment facilitation. Also, registered payment facilitators must keep abreast of the requirements to onboard new sub-merchants, which are extensive legal and compliance regulations that are in place to confirm both the legibility and the legitimacy of new partners.
With Payfac as a Service, all of this is taken care of by your master merchant. These tasks could range from anywhere from deciding the risk level of each sub-merchant, to checking sub-merchants’ financial state to make sure they’re in an acceptable state to partner, to ensuring matching jurisdictions, to checking sub-merchants against MATCH and OFAC lists. Not an insignificant list of things to cover!
You Still Have Access To Easy, Fast Onboarding
One of the main draws of payment facilitation is the rapid onboarding that clients can avail of, and with Payfac as a Service, this speedy process is still well within your reach. Through working with a payment provider, you’re able to underwrite and onboard new clients almost instantly through API access.
Once this is done, card payment is immediately verified and ready to go, and payment onboarding is embedded. Your clients are ready to start collecting and processing payments, and you can rest easy knowing that you’re getting all of the benefits of payment facilitation without a huge amount of downsides. Although true payment facilitation is still an option for some businesses, various factors make accessibility unfeasible – which is why Payfac as a Service is a viable alternative.
The Bottom Line
Payfac as a Service can offer your SaaS platform brand-new revenue streams and almost instant customer onboarding, without any of the significant compliance concerns or fees associated with true payment facilitation. You avoid the massive costs and labor stresses and can avail of the benefits of payment facilitation, without the downsides.
For more information about Payfac as a Service or to discuss payment integration further with a team of experts, contact Agile Payments today. With almost twenty years of experience when it comes to payments, we’ll be able to guide you through your options and get to the solution that’s best for you. Get in touch now.