This content is sponsored by Vantiv, Now Worldpay
Liz Crider, Vantiv, Now Worldpay
As a software provider, you have many options for bringing your payments solution to market. One avenue is to become a payment facilitator (PF). But what exactly does it entail? Following are answers to some of the most common questions about payment facilitators, to help you determine if this is the right path for your business.
So, what are the advantages of becoming a PF? In a nutshell: Simplified merchant onboarding that enables you to:
- Board merchants faster and more efficiently.
- Have complete control over your merchants’ processing experience.
- Increase merchant conversion and retention.
Also, becoming a PF gives you the ability to better monetize payments, because a PF defines the processing rates and fee structure for clients.
And what are the challenges?
- Establishing a thorough understanding of merchant risk and underwriting, while being able to manage fraud, chargebacks, data breaches and other liabilities, falls under the responsibilities of a PF.
- So does being able to build or acquire the technology infrastructure necessary for funding, reporting and all other aspects of payment processing, which can be costly and time-consuming.
- Compliance is another big thing. All PFs must establish and maintain compliance and register as a PCI Level 1 or Level 2 validated service provider.
As a result, PFs tend to be larger organizations or those that have some experiential knowledge about what’s involved with accepting payments. They also tend to be well-suited for low-risk verticals such as education, government, property management, utilities and non-profit organizations. Shopping carts and recurring billing are also fits. And finally, PFs tend to operate in card-not-present environments. Exceptions include a large, well-scaled organization with a proprietary technology that allows PFs to operate in card-present environments as well.
What does it take to become a PF?
For those business that are ready to take the first step in becoming a PF, the process can be broken down into the following broad steps:
- Find a sponsor/acquirer to work with.
- Complete a comprehensive application and underwriting process with the acquirer (including underwriting policies for credit, fraud, risk and KYC).
- Work with the acquirer on pricing agreement.
- Go through a technology integration to certify to the acquirer’s APIs and build or purchase the payments infrastructure necessary to facilitate funding, reporting, transaction monitoring, etc.
- Operationalize an internal process for sub merchant data collection, risk and fraud monitoring.
- Begin boarding merchants for processing.
The rewards of becoming a PF also include expanded reach, greater marketplace adaptability and increased revenue streams.
For answers to more questions about what being a payment facilitator entails, read the full paper here.