The Value Of Becoming A Payment Facilitator – Part II

What about the Payment Facilitator ROI? Part 2

By Angie Ammon | Managing Partner, Fintech 513

 

Last week we shared Part 1 (seen here) of our post series, The Value Of Becoming A Payment Facilitator. In this series we address the questions raised (in this article) about using payment facilitation as a payments strategy for your business.

In our first post we agreed, becoming a payment facilitator is not for everyone. We discussed the first of three questions that come to mind when discussing payment facilitation as a business strategy. In this post we will address the remaining two:

  • Why it does make sense for some to become a payment facilitator
  • Does payment facilitation make sense for you?
  • How you can make the transition

Does payment facilitation make sense for you?

The article, “The ROI On Being a PayFac? Zero,” ominously portrays both the payment facilitator transition and day-to-day operations as a complex process for which most software companies aren’t prepared. While payments is not a strategy achieved overnight, payments-as-a-service firms, such as WePay or Stripe, are exposed to much more risk and responsibility, compared to what individual software companies will have to manage.

When it comes to evaluating risk and mitigating fraud cases, payments-as-a-service firms have to be prepared for anything because they cover companies in many different industries and verticals. The risk an organization takes on as a payment facilitator is relative to their industry or business vertical. WePay needs a lot of different experts because they are responsible for many different companies across a lot of different industries. The more industry types a payment facilitator supports, the more risk they’ll be exposed to.

Software companies often deal with a particular industry or cover a specific vertical, such as the restaurant industry. Servicing this single industry has narrow risk exposure compared to payments-as-a-service firms, like Stripe and WePay, who service multiple industries simultaneously.

For newer software companies, with smaller revenues, that are looking to get to market as soon as possible, leveraging a Stripe or WePay could be a viable resource. They can help you turn payments on quickly and with minimal risk, which makes a lot of sense, given their limited resources.

However, larger, more mature organizations could be leaving a lot of opportunity on the table if they elect to leverage another payment facilitator. This is a strategic decision that should be based on your business model and strategy. But, software companies don’t know enough about the payments space to make an educated decision for their business.

Therein lies the key challenge in the payments space. Instead of educating companies about the pros and cons of transitioning to a payment facilitator, many service providers create confusing explanations resulting in you thinking you need them to survive the payments space.

That’s why Fintech 513 leverages a quantifiable process to evaluate the numbers associated with your specific business. Subsequently, you can see the ROI you can expect by becoming a payment facilitator. Explore that route for yourself, here: Download Starter Project Overview

 

How to make the transition

As discussed, payment facilitation isn’t for every company. Which is why Fintech 513 starts with a quantitative analysis of the opportunity becoming a payment facilitator represents for your business. This leads to a clear understanding of the key facts that will allow you to make an informed decision about your business strategy.

All the points of concern discussed in this article – technology and operational complexity, extreme exposure to risk, and mounting costs – are addressed and evaluated specifically for your company through the Starter Project. This engagement yields the return-on-investment (ROI) your organization can expect to achieve according to your specific business model and the industry you operate within.

If payment facilitation is right for your organization, we can transition right into guiding your company through the transition process. Having a guide who’s been there before helps on a number of different fronts:

  • Minimize the time it takes for your organization to start accepting and monetizing payments
  • Increase the accuracy in which your company mobilizes as a payment facilitator, to maximize the opportunity through your payments strategy
  • Minimize the wasted time, effort and costs associated with the transition process by following a specific roadmap, guided by experts who have been through this process before
  • Increase the likelihood and speed of an acquirer agreement, along with an improved relationship established with more trust because you have experts at your side
  • Compliance: create the strongest contracts to ensure good standing with card companies and acquirers
  • Legal: structure proper protection for your company to mitigate risk exposure
  • Technology: connect the best tools to optimize the customer experience and improve your operational efficiency

Inherent in your successful transition to becoming a payment facilitator are a number of concerns. These are related to your new responsibilities as a payments company. Fintech 513’s Payment Person as a Service (PPaaS) program puts a team of payments experts on your side. This allows you to seamlessly navigate issues as they arise, helping to show you the ropes as you learn to function as a payments company.

If done incorrectly or on your own, the transition to become a payment facilitator can be long, confusing and expensive. Sifting through the responsibilities and requirements across compliance, legal and technology needs, unaccompanied by a payments expert, is a red flag to acquirers. If at any point they feel as though you aren’t adequately covering your risk exposure they can reject your offer. This makes it very difficult to get back on their good graces or connect with another acquirer.

This is why we leverage a quantifiable analysis to evaluate your opportunity to become a payment facilitator. The first step in this process is to evaluate your business and the role payments can play in it. If the numbers don’t make sense, we don’t take the next step.

To this point, we’ve structured an end-to-end support program that enables your company to make a nimble transition without missing a beat. To learn more about each program, click on their respective links below:

What you should do next

Yes, payment facilitation is not for everyone. Leveraging a payments-as-a-service company, such as WePay or Stripe, may fit your business and payments strategy. As with any business strategy decision, your payment strategy needs to be informed and fit your business model. To investigate the potential of your payments strategy, take a closer look here: Click Here To Download Starter Project Overview

While it is a new space for most, the right guidance can create an opportunity for you through payments. My hope is that you are first able to quantify the benefits of your payments strategy prior to making such a big decision. With a roadmap in place, the complex transition process becomes much easier and lucrative for your company.

Stay tuned for more payments strategy guidance

Payments may not be your core business, but it may present a strategic opportunity for you to better serve your customers. Is it the right decision for you?

Click the button below to share a little information with us so that we can find out.

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