If you are presently running a Software as a service (SaaS) business, online marketplace or any other web or app-based platform with clients who accept payments, you’ve likely heard a few new fintech terms buzzing around. Terms like payment aggregators or payment facilitators. But what is a payment aggregator? How does this concept work? And is it something that would make sense for your business?
Being a payment facilitator (or payfac for short) enables these software- or app-based companies and other organizations to offer their clients payment processing as a revenue-generating, value added solution. This innovative model activates payment acceptance upon signing up for a company’s core service. How?
Rather than requiring each client to go through the usual steps involved in opening their own respective merchant accounts, acting as a payment aggregator allows you to board their clients under a “master merchant account”. These clients act as “sub-merchants", while the company needs to follow payment industry rules and manage the payments aggregation process.
A simpler way to describe this is by giving an example of how it works for a crowdfunding platform. Crowdfunding providers are designed to perform a wide variety of functions, enabling clients to seek funding from outside sources in the form of micropayments, handling fundraising, and so on. By acting as a payment facilitator, a Crowdfunding platform can have its own master account.
Its users can sign up easily to accept payments without having to fill out a long application or agree to lengthy terms and conditions. They simply fill out a short application and can get started in funding their dream venture or cause immediately. And as the master merchant, the crowdfunding platform collects revenue for every transaction processed, further maximizing its own revenue streams.
At its core, the idea of a becoming a payment aggregator seems easy, but is very complex to implement properly in a way that will protect your startup from considerable risks that are inherent when becoming a payment facilitator.
Now why don’t these software providers or companies build their own payment aggregation service? First, there would be considerable engineering costs and resources that must be devoted to that endeavor. An additional wrinkle is that engineers often have limited knowledge of payments, and may require multiple iterations before it is a viable commercial product – costing not only significant money but valuable time.
It typically requires hiring a full-time team of people to ensure that fraud and legal obligations are being met. These employees must have considerable experience to make sure that best practices are being maintained. It is impossible to entirely remove risk from the equation, but a team with solid knowledge of the payments industry can ensure that the risk to which the firm is exposed is minimized.
It’s estimated that, in total the startup costs for becoming a payment aggregator could be $50,000 or more! This includes the need to hire people to mitigate risk and ensure compliance and reporting standards are being met for payments. These costs could be too much for a startup to manage. However, as more companies shift to this model, those that stick with older payment models may soon find themselves left behind and shedding clients at an exponential rate.
GlobalOnePay saw these problems and complexities of becoming a payment aggregator and saw an opportunity to help by offering Payment Facilitator Connect. App or web-based providers are recommended to start with Connect, the all-in-one program that handles all the complex requirements of payment aggregation so businesses can focus on growing their clientele. The platform is fully customizable and can be scaled to fit businesses that will grow from 50 transactions a month to 50,000. The goal was to create a payment platform that was simple and seamless to integrate in a few steps. In fact, in as easy as six steps, you can become a payment facilitator!
Step 1 starts with Registration. Here you will receive full support including bank sponsorship, legal framework, card brand registration, report, activations and funding. Furthermore, the program is built around customization, which leads to…
New clients can easily set up their user preferences, including the ability to track new client submissions and monitor payment activities through the Partner Portal. Need help along the way? Our Implementation Team will be available to provide assistance as needed.
Now we simplify the complex: integration! The client onboarding process can be integrated in a couple different ways, either via API to your website or a customizable, white-label Hosted Application form. Our goal is to help maintain your brand and speed your clients through the process as seamlessly as possible.
Account Management. Here you have full control and the ability to manage logins, permissions and track all submissions by users. You can also set real-time notifications and alerts, and track everything in detail.
Now for the best part: Approvals. Payment Facilitator Connect works diligently behind the scenes to ensure that approvals can be processed in real-time and happen nearly instantaneously. To ensure risk is minimized, all submissions are screened to ensure compliance with fraud prevention and financial crimes agencies. Our automated underwriting includes KYC/KYB checks, AML verification, MATCH list and OFAC screenings. And once a client is approved, they can begin transacting immediately.
Finally, tracking payments could not be easier! Every single payment is tracked, including funding, billing and chargebacks. Keeping with GlobalOnePay’s commitment to customization, this can be monitored either via our robust back-office dashboard or integrated into your systems by way of API.
It’s that simple and seamless! There is a reason for the buzz around payment facilitators right now: they’re totally changing the way companies are able to do business. With a strong team, great support and a platform that is both easy to use and easy to integrate, Payment Facilitator Connect can give your web or app-based start-up or established tech firm the edge it needs to grow and succeed. Join us, and let’s change the future together.
Tedd Huff, VP of Products, is a 19-year veteran of electronic payments, providing businesses with strategic and tactical direction by enabling a value-driven user experience. His goal is to simplify the complexity of payments and promote growth in emerging markets through fields such as mobile payments, e-commerce solutions, online fraud prevention and security. Tedd has headed a FinTech startup and delivered innovation and process improvements for multiple dominant payment organizations. As Vice President of Product for GlobalOnePay, Tedd heads up a team of global payment specialists, helping businesses grow faster by accepting a wider range of payments from virtually any market in the world.