If payment processing can help extend your capabilities as a platform, then becoming a payment facilitator (PayFac) may be the way to go. Some of the best reasons for becoming a payment facilitator include a growing list of advantages that benefit both the merchant and the consumer. As payment operations are moved in-house, merchants gain 360-degree visibility over the cost of operations with a bird’s eye view of efficiency.  

As with any new business framework, there are several misconceptions about the PayFac model. Conducting your own research is necessary to determine if becoming a PayFac can benefit your business and open new revenue streams for the growth of your company. First, let’s unravel some of the most common misconceptions about the PayFac model itself. 

Payment Facilitation is Profitable for Any Provider

Not true. To be successful as a PayFac, you want a strong customer base that accepts payments directly from consumers. Your customer base will be the backbone of your unique new revenue stream which will come indirectly from smaller consumer payments for merchandise or services. Remember that payment aggregation will not be extended to every merchant, so some may be required to have individual merchant accounts.

Maintenance and compliance can be continuing expenditures, so you’ll want a fairly large consumer base to offset the cost of doing business. Risk management and settlement reporting will no longer be handled by another company meaning you must be fully committed to accepting the responsibility. One way to mitigate these risks is to configure a partnership with the right merchant ID. 

Efficient Payment Processing

Providing efficient payment processing solutions quickly and securely is one of the most attractive benefits to becoming a payment facilitator. Common pressure points typically associated with merchant services are easily resolved and third-party providers are not necessary with the PayFac model. There is no underwriting process because payment facilitators assume the risk and liability which also means there is no long wait for vetting. You can be up and running in a matter of hours. It almost seems too good to be true. The PayFac Model will not be ideal for every business, but it can certainly open doors to a larger share of the available revenue while providing a seamless experience for your consumer base.

Fintech and payment technology are evolving quickly. Those who don’t stay ahead of the game are stuck waiting days for approval and paying fees for each individual transaction. Instead of paying fees on your potential profit, get creative and turn those fees into profit by partnering with Amaryllis