As an Independent Software Vendor (ISV), Software as a Service (SaaS) provider, or just an online merchant, having a payment solution is crucial to your business. The traditional setup would be to have a merchant account where your clients are redirected to complete payment after making a purchase.
But such an approach does not offer a great customer experience and it’s also cumbersome. Enter Payment Facilitation. With this newer approach, an intermediary party will be handling your payment processing model. We use the word intermediary because there still exists a main merchant – mostly a bank – in this setup.
But what is Payment Facilitation?
At its core, payment facilitation is simply what it sounds like – a service that makes it possible for businesses to accept payments from their customers with ease.
The intermediary party that offers this service is known as the payment facilitator (PayFac), acting as a master merchant account with the ability to create sub-merchant accounts. When you sign up for payment facilitation, therefore, your provider is basically only providing you with a sub-account that remains under their control. However, you can white-label all payment facilitation services as your services so that customers can feel at ease knowing that they will always come to you if something’s wrong.
With that in mind, it’s now easy to understand what payment facilitation as a service is all about.
So, what is payment facilitation as a service?
In simple terms, payment facilitation as a service (PFaaS) is the provision of payment facilitation services by a payment facilitator. The payment facilitator acts as an intermediary between the bank and ISVs or online merchants.
They will acquire a main merchant account under which every business that signs up for PFaaS has a sub-merchant account. When offering such services, a payment facilitator will charge a facilitation fee for every payment that they process.
This fee is typically a summation of the real costs of processing a payment such as interchange fees and the PayFac’s profit margin. PFaaS is typically more accommodative and less costly compared to owning a merchant account.
The many benefits of PayFac-as-a-Service make it worth teaming up with PayFac providers like Tilled to streamline your payments processing capability and improve the overall value of your business.
What are the associated benefits?
Several benefits make PFaaS worth the investment. Here are a few:
1. Increased revenue
Even though PayFacs act as intermediaries, they will have higher bargaining power when engaging banks. That and the fact that they can open multiple sub-merchant accounts under their merchant account makes it possible to offer PFaaS at lower costs.
What’s more, PayFacs also offer shared revenue in their payment facilitation models, allowing your business to monetize the payments from your customers.
2. Better customer management
Thanks to the software tools that PayFacs offer, you can manage your customers better. It’ll be easier to onboard merchants, track payment metrics, edit information, and do a lot more from a centralized location.
3. Greater control over user experience
Since you can white-label the services offered by your PayFac to make them look like your own, it will be easier to pilot the user experience.
When customers need some assistance, they will always come to you. This makes it easier to offer a lovely experience that will keep them coming back.
4. Greater scalability
Thanks to the flexibility of payment facilitation services, you can equip your business with the appropriate payment processing capabilities. As your business grows, you can get the package that makes it possible for your business to cater to a larger customer base.
Handle payments better with PFaaS
Now that you know what payment facilitation as a service is all about, you can leverage its power to offer better payment processing.
At Tillled, we strive to be the best payment facilitation provider, since the growth of your business means the growth of ours.
We take over your payment handling process so that you never have to worry about it again. That way, you can focus more on improving the core elements of your business.
So if you’re looking to finetune your payment processing model, make sure to engage us today.
