A Payment Facilitator or PayFac acts as a the Master Vendor. The Payment Facilitator role would be to swiftly and easily on-ship their sub vendors or SaaS platform users to facilitate credit, debit card and in some situation ACH transactions with regard to participants in their payment ecosystem. The particular Payment Facilitator is responsible for regulatory compliance and has economic risk of their sub-users.
In the particular past the sole Payment Facilitator Provider giving was to be a? True PayFac?.Managed Payment Facilitation Providers Learning to be a true Payment Facilitator is expensive, time consuming and requires staffing needs to satisfy compliance in addition to risk mitigation demands. Essentially you come to be a payment company in addition in order to in your core Software offering.
Today technology and regulation changes enable a Hybrid or Managed Transaction Facilitation model. Within this scenario typically the SaaS platform looking to gain the advantages of being a Transaction Facilitator [fast onboarding, revenue generation, more control associated with payments process] can take good thing about the PayFac advantages without incurring much of the costs or significant compliance challenges. We will use an example to illustrate just what the Payment Facilitator role is in addition to how the true versus managed tasks would vary.
Permit? s use an example: A SaaS offers an invoicing solution eg MyBooks. Businesses that need to leverage their own invoicing solution full a simple software and 15 minutes or even so later they may be approved and established up to accept customer payment. For our example let? s say the enterprise name is? Finest Landscapers?.
Note: With this application process we see one of the differences between True PayFac and Maintained PayFac. Best Landscapers execute a agreement that spells away responsibilities and charges. If MyBooks gone the real PayFac way the consumer contracts with MyBooks.
If MyBooks was a Managed PayFac these are a sub PayFac of an additional registered PayFac. Inside essence these are utilizing all the compliance and tech resources the Master Transaction Facilitator already offers in place. In case MyBooks elects the particular Managed Payment Facilitator route then the particular customer will discover research to the Master Payment Facilitator inside the sign-up phase.
Let? s say these people send an invoice to Suzy Roberts for $100. The lady pays online through credit card [ACH is possible in some solutions].
The business receives customer payment less the fees cost with the Payment Facilitator. Often this is usually in the 2 . not 9% and 30 cent range therefore the deposit would end up being for $96. 70
Onto her credit credit card statement:
In case a True Payment Facilitator Suzy Jones sees MBS* Best Landscapers [MBS is decrease for MyBooks]
When My Books functions as sub Transaction Facilitator then Master PayFac abbreviation shows up before Best landscapers.
In both True and Managed Payment Facilitator models presently there is a income stream generated for each payment transaction. Most of the True Payment Facilitator model offers greater revenue potential nevertheless is often not necessarily the case. Much depends on the particular SaaS offering plus a-perceived risk b-overall payments volume.
If your app contains a low risk large potential $ processing volume you tend to have negotiating power and the revenue generation prospective tends to become about equal.
Getting a Payment Facilitator or PSP [Payment Service Provider] is often a great match for SaaS programs that offer the payment processing remedy.
But where can you find a Transaction Facilitator Provider?
Initially Vantiv was the only choice plus required that you become a true Transaction Facilitator. As technology and regulations have got evolved the Handled Payment Facilitator option is becoming available. Right now there are now a number of acquiring banks that offer the ability to to leverage PayFac like capabilities without the massive time and $ investments. These include TSYS Wells Fargo and PaySafe.