Becoming a payment facilitator can create a great opportunity for your organization to increase their value to customers. If you provide software or other technology services to your customers, payment facilitation could enhance your product and create a new source of revenue within your existing solution.
As a payment facilitator, you enable your customers to process payments on their behalf. This decreases their responsibilities on the administrative side of their business, and allows them to focus on delivering the best experience to their customers.
As a payment facilitator, you act as the primary merchant with a direct relationship to an acquirer or third party processor, which provides sponsorship into the networks, such as credit card companies Mastercard and Visa. Your customers act as sub-merchants on your account. This means that you manage transaction processing, pricing, service, and reporting. As a payment facilitator, you provide the level of service and support your customers desire, and you help them streamline their processes.
Becoming a payment facilitator is no easy task, though. You have to meet the requirements of the credit card networks, acquirers and the sponsoring banks. You will also need to ensure that you have the resources in place to process and manage a high volume of transactions.
If you’re new to the payment facilitator space, the process may seem a little overwhelming. The first step is to understand how operating as a payment facilitator can benefit your organization, and the responsibilities that come with this transition. Below are a couple signs that your company could be well-suited to become a payment facilitator. If these items sound familiar, you may want to take the next step and consult with a partner who can guide you through the process of becoming a payment facilitator.
You Have a Natural Market
The most successful payment facilitators are those who already have an existing base of potential customers. Think software companies who offer e-commerce support or tech companies who implement and manage point-of-sale systems. Their product is directly related to credit card processing and the payment facilitator services are a natural fit within the existing product.
Consider a company that installs and supports in-person, point-of-sale systems. If this company isn’t a payment facilitator, the company’s customers have to use one partner for their point-of-sale system, and one or more partners to enable credit card transactions. That can create a disjointed experience for the customer because they have to work with multiple vendors to run their business.
The point-of-sale company could consider becoming a payment facilitator to embed payments processing into their existing solution. That eliminates the need for the merchant to partner with additional vendors. As a payment facilitator, this point-of-sale company can provide multiple services to their customer as a single vendor, seamlessly providing their core service, enabling payments and consolidating reporting with a single, actionable report.
Additionally, the point-of-sale company can market their new payment facilitator solution to their existing base of customers. Since the payment facilitator solution embeds naturally into their current software system, current customers form a natural, ready-made market.
Point-of-sale software is one example, but there are a wide range of businesses that could be a natural fit for payment facilitator solutions. To really leverage the solution, it’s helpful to have a ready-made market and existing customer base who will value your new payment facilitator capabilities.
You Have The Resources To Process Payments
It’s important to understand the difference between different payment strategies. Becoming a payment facilitator is one approach. Alternative solutions, like becoming an independent sales organization (ISO), is another.
As an ISO, you simply resell credit card processing services offered by another institution, like a bank. You market the services to your customers, but the other institution handles the actual management and processing of transactions.
As a payment facilitator, there is no other institution involved. You are responsible for processing transactions and coordinating payments between the card holder and credit card networks. You are also responsible for related activities, like processing refunds, chargebacks, and managing cases of fraud.
As you might imagine, these responsibilities can be complex. The major credit card companies, like Mastercard and Visa, have complex rules you must adhere to when it comes to technology, compliance, and legal agreements. To meet those rules and stay compliant, you will likely need to allocate additional resources to implement new technology, manage operational processes associated with payments, and maintain your level of service to your customers.
You will also want to evolve the resources you leverage to communicate with your current and prospective customers. That means amplifying your sales and marketing efforts to introduce your payment facilitator solution to your customer base.
Most importantly, there’s the task of embedding payment facilitator services into your existing solution. The complexity of that step depends on your specific solution. You may offer software that is a natural fit for embedding payment services. Or your product may need custom development or engineering to make payments function.
The best next step is to evaluate your specific needs to become a payment facilitator. It isn’t for every company. While the opportunities are often great, your organization will go through a transition that affects their current operation.
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?
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