4 Ways to Attract Merchants Using a PayFac-as-a-Service SolutionMary Ann Felts
As an independent software vendor (ISV), standing out in the marketplace is paramount for attracting new merchants. But what do merchants want? In our experience, growing their business is pretty high on the list of priorities. So, anything you can do to support this goal will give you a leg up. One impactful way to drive business growth is to offer simple, streamlined payment options that help merchants start selling as fast as possible.
The typical road to payment acceptance can be a journey. It often requires some paperwork, an underwriting process, and one to two business days to get approved and set up with a merchant account. And while this model works for many merchants, others may benefit by teaming up with a provider — a partner — who can help simplify payments and bypass the traditional application process.
With this in mind, it’s no wonder that the payment facilitator, or PayFac, model is growing in popularity. But what exactly is a PayFac model, and how could it help ISVs attract more merchants?
What is a PayFac?
A PayFac is a merchant services model in which an organization opens a master merchant processing account with an acquiring bank so that it can serve a myriad of sub-merchants. This business model enables the organization, now a payment facilitator, to bring their merchants a seamless and instantaneous onboarding process, as well as flat-rate pricing structures — all while the payment facilitator itself enjoys revenue sharing opportunities and full control over their clients’ end-to-end processing experience.
Many payment solutions providers, like Cardknox, are simplifying this process to better serve ISVs. This plug-and-play model is called a PayFac-as-a-Service (PFaaS) solution and includes many of the same benefits a typical PayFac would enjoy, just with less investment and risk — sounds pretty good, right?
How Can Using a PFaaS Solution Attract More Merchants?
By utilizing a PFaaS solution, ISVs can help merchants start accepting payments faster — with less paperwork, instant approvals, as well as reduced fees. Armed with these benefits, ISVs are better positioned to deliver value and ultimately attract more merchants. Here are some of the key selling points of the PFaas model:
1. Rapid Account Approvals
Opening a merchant account in order to use your software can be a bit of a hurdle, especially for smaller merchants who are just getting started. By onboarding with a provider who effectively acts as a payment facilitator, merchants can skip the manual underwriting process. Using a few key data points and advanced risk assessment technology, merchants are granted approval to start processing payments in seconds versus days. Breaking down these barriers reduces friction during the onboarding process and increases the pool of merchants who can use your software.
2. Reduced Cost
A PFaaS model reduces capital costs for the merchant (as well as the ISV!) since they are provided with an all-in-one solution that removes the need to purchase additional hardware and software. Additionally, overhead is reduced when merchants sign up with an ISV that acts as a payment facilitator, as many ISVs are equipped with products to support various back-office activities such as invoicing and billing, inventory management, and purchasing software.
3. Instant End-to-End PCI Compliance
PCI requirements can be confusing and require expertise to implement. Signing up under another organization or ISV that subscribes to a PFaaS solution gives a business instant PCI Level 1 Compliance, which is a huge burden lifted for merchants. Removing complexity and ensuring a baseline of security gives ISVs a clear differentiator when competing for merchant business.
4. Simple, Flat-Rate Fee Structure
Subscribing to a PFaaS model can also help you attract merchants by simplifying rate structures. For example, organizations that utilize the Cardknox Go PFaaS solution can offer merchants a simple, flat-rate fee structure. In this scenario, merchants can accurately predict costs and save time on monthly statement reconciliations.
Becoming a PacFac with Cardknox
Cardknox’s comprehensive PayFac platform, Cardknox Go, gives developers, ISVs, and VARs the ability to onboard merchant accounts easily and in record time, which in turn can provide their merchants with the benefits of flat-rate pricing and scalable payment solutions. Cardknox Go delivers flexibility with payment options for in-store, online, and mobile devices, as well as support for a variety of payment methods. For more information on payment facilitators and how they work, read our whitepaper, “What is a Payment Facilitator.”