Six Benefits of Using a PayFac-as-a-Service SolutionMary Ann Felts
As an independent software provider, building a portfolio of merchants likely ranks high on your list of priorities. In a previous post, we discussed how you can do just this by utilizing a PayFac-as-a-Service (PFaaS) to attract more customers with appealing payment processing benefits for merchants like lower costs, instant approvals, and flat-rate fees. But in addition to attracting merchants, software providers should also be educated on the direct benefits that this model can provide to their overall growth and day-to-day operations. Though, let’s back up a minute. What is a payment facilitator or “payfac” anyway? Keep reading for the cliff notes version or jump down to ‘Monetizing Payments’ if you’re ready to dive in.
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.
Integrating payments into your software is an added benefit for your merchants that takes time and effort, so why shouldn’t you be rewarded? With a managed payfac solution, it’s possible to monetize the transactions occurring on your platform. In addition to charging a fee for your software, you can earn a percentage of the processing fees, thereby creating a recurring revenue stream. This new income stream can also bump up your businesses’ valuation, making you more attractive to investors. In some cases, we’ve even seen Cardknox customers make more from monetizing payments than the revenue generated from the actual service or subscription fees.
Control the User Experience
User experience is crucial to success in the development world. In fact, recent statistics show that 88% of users are less likely to return to a website after a bad user experience. On the positive side, however, every $1 invested in UX results in a return between $2 and $100 — so even if you land on the low end of that range, you are still seeing a 50% increase. By using a payfac-as-a-service solution, developers have considerable control over their merchants’ customer experience, including transaction processing, streamlined billing processes, and chargeback management.
Centralized Merchant Management
With a PFaaS solution, all of your merchants are easily managed using one platform. You can quickly add merchants to your system, edit contact information, view relevant payment metrics at a glance, generate reporting on-demand, and more. Centralized management means less administrative time spent on managing merchant accounts and more time spent on your core competencies — as well as increased customer satisfaction.
Ease of Onboarding
With a PFaaS solution, you act as the payment facilitator for your merchants without the added paperwork or signatures. Adding a merchant is as simple as sending a pre-filled, electronic application. Since merchants do not need their own merchant account through a processing bank, they are instantly approved and can begin taking payments almost immediately. You benefit from a streamlined, repeatable process — giving you the ability to onboard more customers in less time.
Long Term Scalability
Being a developer or business owner requires a forward-thinking approach so that you can anticipate future needs. Investing in scalable technology gives you the ability to ramp up services quickly as your business grows since the infrastructure is always there waiting for you. By using a PFaaS, you can support any number of startups all the way to the largest and most sought-after merchants.
Personalized Support When You Need It
Using a payfac solution enables you to act as a payment facilitator without having to be an expert in payments. In a managed PayFac model, you can trust the knowledge and expertise of your payment integration provider. For example, Cardknox offers white-glove phone support designed specifically for developers. So whether you have a coding question or need help with a specific merchant account, our team is here to support you.
Does a PFaaS sound like a good option for your business? Learn more about the benefits and features of our managed payment facilitator solution, Cardknox Go.