For many businesses, the idea of establishing themselves as payment facilitators is as current as ever. There was a genuine PayFac surge in the previous decade. We have to accept that this is primarily due to the need for and availability of payment facilitation services, as well as the propensity of acquiring banks to outsource their customers’ payment processing needs to third parties. At the same time, the achievements of payment processing platforms like Stripe, PayPal, WePay, Braintree, and others served as inspirational case studies.
The process of becoming a PayFac is simplified for companies that already have consumer background verification logic in place. ISOs, SaaS providers, franchisers, ISVs, proprietors of online marketplaces, and even venture capital organizations may fall under this category. The introduction of intermediate solutions further increased the attractiveness of using a payment facilitation model. PayFac in a box, managed PayFac, White-label PayFac, etc., are all examples.
Becoming a PayFac comes with significant out-of-pocket thebirdsworld expenses, more obligations, and further duties, regardless of how appealing the proposition may sound. So, if you want to become a PayFac, you should be ready for the steps you’ll need to take.
10 fundamental steps a business should follow to become a payment facilitator.
- Create a PayFac account with the card associations (via your acquirer). Visa and Mastercard’s annual registration fees are close to $5,000.
- Join forces with a reliable acquirer/processor. The most important aspect of taraftarium24 our collaboration is your transaction processing conditions and costs/fees.
- Become a PayFac and go through the purchasing bank’s underwriting procedure. You still need to go through underwriting as a new company, even if you are already a certified merchant who an acquirer has underwritten for quite some time, if you want to start offering payment facilitation services. Remember that not all merchant account issuers can legally underwrite you as a PayFac, even if they provide merchant accounts. Examining your operational model, financial credentials, anticipated transaction processing volumes, and other information will be required.
- Get the necessary cyber insurance and general liability insurance.
- Create a system for overseeing sub-vendors. The merchant life cycle may be monitored and supported in real-time thanks to the merchant management system.
- Create a system for the preliminary underwriting and merchant background check (KYC logic, etc.).
- Collaborate with a payment gateway. For this situation, you may use many avenues. Start by creating a brand new “gateway” product. Second, you may infosportsworld buy the rights to utilize a pre-made product whose source code is publicly available and modify it internally. Finally, you may use a white-label gateway. The last option is to team up with an external gateway service.
- Obtain a PCI Compliance Level 1 Certification.
- Put out a plan for financing for sub-vendors. In comparison to ISO, this is a significant plus for PayFacs. Despite providing commercial finance for (and/or through) an acquirer/processor, they actively participate in the sub-merchant funding process.
- Put safeguards in place to prevent fraud from both customers and retailers.
In Conclusion
In reality, these are only the very minimum requirements for any aspiring PayFac. United Thinkers assists businesses in developing payment processing capabilities. When you begin using the UniPay gateway, you’ll be light years ahead of the competition.
Accordingly, you may talk to payment specialists at unipaygateway.com for additional in-depth advice and tailored suggestions for your unique company scenario. As they have done for other businesses that are now operating as facilitators of payments, both white-label and full-featured, they will be pleased to assist you.
