While the payment facilitator way of doing business is still a relatively new entrant in the payments industry, the model has been around long enough to have generated some seasoned veterans.
Some of those veterans offered their advice during a discussion at PF WORLD 2019 moderated by Mary Buckley, head of financial partnerships for Xero. Kasturi Mudulodu, vice president of Product Management for Yapstone and Nina Velleyan, president of Stewardship Technology, gave attendees a look into their companies’ evolutions as payment facilitators.
The speakers agreed that, while becoming a payment facilitator has its advantages in many cases, those benefits don’t always outweigh the risk and the operational needs for every company.
Mudulodu recommended that companies initially set aside any considerations about the payments model.
First, “given your SaaS offering, dream. Imagine the right experience – the best experience – that you can have” for your customers, she said.
“Once you have that, then understand what it means to enable payments,” she said.
Both speakers addressed revenue as a reason to become a PF. Velleyan said that for Stewardship, another benefit – control of the customer relationship – ranked very highly, especially when it came time to sell the company last year.
“When you think about the value of your company, if you’re a software company, owning the merchant is really, really important,” she said.
Setting up relationships with other providers is a central part of the PF journey. Both companies said that they are processor-agnostic, meaning that they have chosen to make their platforms capable of working with multiple processors. For Yapstone, geography has played a significant role in that decision.
“If we are servicing merchants in tens of countries, and hopefully hundreds over the next few years, there’s not a single processor that can serve us well across all geographies,” Mudulodu said.
Both speakers recommended developing a deep understanding of your clients and focusing on your software before considering becoming a PF, perhaps entering into referral partnerships to understand what accepting payments requires – especially when it comes to taking responsibility for the risk that is involved.
“As you get more and more sophisticated and you get bigger, you’re going to want to own the customer. But you also are going to have to have payments capability and expertise in your company,” Mudulodu said.
But particularly for companies in very low-risk verticals, taking on the payments may make sense earlier. Stewardship, for example, offers software to nonprofits and faith-based organizations, a category Velleyan said sees very little fraud.