Payment Facilitator Alternative

The payment facilitation market is booming, with revenues expected to reach $15 billion by 2025. The traditional payment facilitator model is designed to allow companies to accept card payments without going through the cumbersome process of establishing a merchant account with a bank. While there are many benefits for ISVs to being a payment facilitator, many resources are needed to make the process successful.  Is there a payment facilitator alternative for ISVs?

How Does Payments Data Provide Value?

No matter what industry you serve, payments data can be extremely valuable when it comes to decision making and future planning. Any time a consumer makes a payment through an ISV’s application, data is generated. An ISV can leverage this useful data provided by an experienced payments partner. This data can help both the ISV and its users users make intelligent decisions about their business.

Every payment transaction comes with a wealth of information that can be used to drive your approach. Examples of payments data that can be used are average ticket price, preferred payment method (credit card vs. ACH) and transaction types (auth, sale, credit, refund, etc.). ISVs can take this data to view the overall health of their customer portfolio, while businesses can use this data to drive sales and marketing strategy.

What Is the Role of a Traditional Payment Facilitator?

The payment facilitator process was started to streamline the procedure for companies to accept electronic payments. Historically, businesses who wanted to accept credit card payments were required to set up a merchant account with a payment processor. One of the most significant issues with this process is the time and effort it takes to set up a merchant account. Payment facilitators solved this challenge by starting a master merchant account and allowing their clients to accept payments using their accounts.  Many ISVs have hopped on board with this model to fast track their payments revenue and streamline their users’ onboarding process. It’s important to note the model is a lot more complex than just sub-merchants and increased revenue benefits. But that’s another topic for another day. 😊

Are there Payment Facilitator Alternatives?

To support the traditional model, payment facilitators need extensive cash reserves and full-time support from staff to manage client payments and the overall payment infrastructure. Payment facilitation requires extensive coordination, including reporting, funding, writing contracts, and performing underwriting duties.

To streamline the system and make it easier to accept payments, a payment facilitator alternative has emerged. This model, often referred to as managed payment facilitation gives software providers the benefits of payment facilitation without the cost and hassle of the traditional model.  The benefits of a payment facilitator alternative model include:

• No capital investment.
• No full-time staff support needed.
• No risk and liabilities for the software provider take on.

A payment facilitator alternative should be considered by those that want to offer their customers instant merchant account onboarding without the stringent requirements that come with being a payment facilitator.

Interested in an alternative payment facilitator partnership? Let’s chat! Looking to become a payment facilitator? We can help you with that too. Contact us today to find the best partnership model solution for your business.