Software as a Service (SaaS) has been one of the fastest-growing market segments since 2019. The technology advances over the last few years has created an amazing opportunity for SaaS companies to grow their payment processing. In this article, you will find out why every SaaS company should consider becoming a Payment Facilitator (PayFac).
As a PayFac, you get to decide who you are going to do business with so you can sign up merchants very quickly and charge a fee for each transaction running through your system. If you’re not a PayFac then you are required to work with a processor and have no control over fees. Read on to find out more about the benefits of becoming a Payment Facilitator as a Software as a Service (SaaS) company.
- New Revenue Streams
As a Payment Facilitator, SaaS companies are able to offer a seamless path to electronic payment acceptance which helps grow digital payments. Becoming a PayFac requires taking on underwriting risk, in return for a larger portion of the payments stream, which can boost net revenue by 20% to 50%. You can also handle payments directly in your software, rather than using a company like Stripe, PayPal, or Square, which takes a large chunk of the payment processing fees.
- Speed Up Merchant Onboarding
Merchant onboarding can be a time consuming process, but as a Payment Facilitator, you can speed this process up, which is very important. Today, if your platform enables payments for your merchants, you either have to send the merchant to a third party payment processor to apply for what’s called the merchant account or you’ll need to collect all that information and pass it along to the payment processor. With instant onboarding in the PayFac model, you have the power to set-up sub-merchants quickly, which makes onboarding new clients much easier. By automating this process, you won’t need to hire new staff to take on additional workload as new merchant applications arrive.
- Increase Business Valuation
Looking to increase your business valuation? Well who isn’t! With a portfolio that is easier to analyze, businesses and investors may place a higher premium on your company’s worth compared to company’s with a customer base that is bound to a specific payment processor. As more merchants are added to your payments process and new revenue streams begin to build, there will be more opportunity for a higher business valuation.
- Full Control of the Customer Experience
As integrated payment processing has grown, there has been a higher demand from SaaS companies to have more control over the customer experience. When SaaS companies become Payment Facilitators, they have more flexibility when handling complicated payment models, such as underwriting and onboarding, settling disputes, disbursements, and post-processing. You also have the ability to create and manage programs specifically tailored to meet your merchant needs.
- Flexibility in Distributing Funds to Merchants
PayFac’s have full control over the payment process and can help manage risk on the payout side. For merchants with higher risk, you can payout weekly or bi-weekly instead of next day. You can also limit the payout amount to keep some revenue until the sub-merchant satisfies all risk requirements and builds a good track record.