How to Become a Payment Facilitator vs Payment Processor

Tuesday, December 12 2023

Are you looking for some practical guidance on how to become a payment facilitator? Well, we’d tell you this first – it requires commitment, skills, and the ability to take a good amount of financial risk. If you’re someone willing to take the leap of faith, then this guide is just for you.

Remember, those that successfully navigate through the challenges, primarily financial, when on route to becoming payment facilitators enjoy great rewards.

In this detailed post, we will give you a bird’s-eye view of what you need to be a successful payment facilitator. Also, we will tell you some differences between payment facilitator vs payment processor. That said, let’s dive right in:

Payment Facilitator vs Payment Processor:

Before we dive into the ‘who and what’ of the payment facilitation, let’s talk about payment facilitator vs payment processor. This will ensure everybody reading this is on the same page. So, the main difference between both of these is how the merchant accounts are structured and organized.

With the payment facilitator or PayFac model, every user gets a sub-merchant ID. Each ID is directly registered under the master merchant account of the payment facilitator. This allows faster onboarding and greater control over your user’s experience. While this is a great way to eliminate the middlemen (ISOs), you will be responsible for directly dealing with an army of sub-merchants.
With the payment processor model, you need to rely on the Independent Sales Organizations (ISOs). They sell your payment solutions to the merchants. So instead of directly boarding the merchants via the PayFac model, you will have to add a layer of ISOs working under you, which means a few extra steps to take, ranging from hiring the ISOs to getting merchants onboard via them.

Now you know the basics of payment facilitator vs payment processor, we can move towards the topics you are the most interested in:

Who Can Become a Payment Facilitator?

Professional payment facilitators can remove most of the hurdles that arise when setting up customers for payment acceptance while also offering a closely integrated experience to users.

So if you’re a Point-of-sale systems provider, a merchant acquirer, or ISO, having a product/service you want to combine with the payment facilitation model, you are well-equipped to be a facilitator.

This is especially beneficial for ISOs working in a low-risk niche where they get recurring billing like property management. They can easily take the financial risk of becoming a payment facilitator.

How to Become a Payment Facilitator – Do You Have What it Takes?

Now that you know who can become a payment facilitator let’s talk about what it takes to be one. Remember, it’s not just an expensive area to step into; it also requires a wealth of knowledge and special skills to go through the process and build your payment facilitation business.

Therefore, unless you are an ISO, as mentioned above, you will be trying to learn the ropes of a very complex business model without the advantage of prior knowledge.

To help you understand things further, we have given a bird’s-eye view of things involved in the process:

You’ll have to register with four major card brands and make an annual fee payment
You will have to find and negotiate a processing agreement with a payment processor that’ll sponsor you in becoming a payment facilitator
You will have to develop policies for risk management and find capable people for managing it
You will have to set up a platform that’ll be used to run your business and manage all areas of payment processing, such as finding reports, transaction monitoring, etc. OR, you can connect with a company having a payment facilitation platform already
You will have to bring sub-merchants on board and start processing

Furthermore, it’s not a finite process that you need to go through once to become a payment facilitator. You will have to keep investing your time and money on an ongoing basis.

Keep in mind, when you’re operating as a payment facilitator, all the payments your sub-merchants process are your responsibility.

As for the cost, your initial investment would likely be in the six figures, and in the long run, you’ll have to spend even more than that.

Seems Challenging? Here’s a Simple Solution - Partner Up With a Payment Facilitator:

If you’re still reading this post, then it means you are looking for something that doesn’t come with so many roadblocks and requirements. Something that’s flexible and can help you become a payment facilitator without shelling out big bucks. Well, the great news is that there is a solution – partner up with a payment facilitator like Shaw Merchant Group.

With us as your reliable partner, you won’t have to go through the scary and overwhelming process mentioned above. You will not have to be responsible and accountable for hundreds of sub merchants. Also, you will get most of the benefits of a payment facilitator without having to be one from scratch.

Just partner with Shaw Merchant Group and use our registered payment facilitation platform. You can use it to establish your own unique offering in the market— no need to break your bank and set up everything from the scratch. We’ll help you set everything up at minimal costs while ensuring you enjoy most of the benefits of being a payment facilitator.

The gist is, with us on your side, you’ll be able to focus on your main business while also reaping the juicy benefits of operating as a payment facilitator.

You can learn more about how to become a payment facilitator using Shaw Mrchant Group's platform and save a lot of money and enjoy a range of benefits. Feel free to get in touch with us today – let’s make you a payment facilitator so you can enjoy more freedom and greater profits

Posted by: Scott Shaw AT 11:53 am | Permalink | Email

In today's digital age, payment processing has become an essential part of any business that sells goods or services online. With the rise of e-commerce and mobile payments, the demand for payment processing services has never been higher. One type of payment processing model that has gained popularity in recent years is the white label payment facilitator, also known as a payfac.

What is a White Label Payment Facilitator?

A white label payment facilitator is a company that allows businesses to accept electronic payments through their own branded platform. In essence, a white label payment facilitator acts as a middleman between merchants and payment processors, providing the technology and infrastructure needed to process payments securely and efficiently.

One of the key advantages of working with a white label payment facilitator is that it allows businesses to quickly and easily start accepting electronic payments without the need to build their own payment processing infrastructure. This can save time and money, as well as provide access to advanced payment features and services that may not be available to small businesses on their own.

How to Become a Payfac?

Becoming a white label payment facilitator involves several steps and considerations. Here are some key factors to keep in mind if you're interested in becoming a payfac:

1. Understand the Industry: Before diving into the world of payment processing, it's important to have a solid understanding of the industry, including key terms and concepts such as merchant accounts, payment gateways, and PCI compliance.

2. Obtain Necessary Licenses and Certifications: In order to become a payfac, you will need to obtain the necessary licenses and certifications required by your state or country. This may involve applying for a Money Transmitter License or becoming a registered ISO (Independent Sales Organization).

3. Choose a Payment Processor: As a payfac, you will need to work with a payment processor to handle the actual processing of payments. It's important to choose a reputable processor that offers competitive rates and reliable service.

4. Build Your Technology: Once you have chosen a payment processor, you will need to build or customize the technology platform that will be used to process payments. This may involve developing a payment gateway, integrating with third-party software, and implementing security measures to protect customer data.

5. Onboard Merchants: With your technology in place, you can start onboarding merchants to your platform. This involves setting up merchant accounts, verifying their identity and business information, and providing them with the tools they need to accept payments online.

6. Provide Customer Support: As a white label payment facilitator, you will need to provide ongoing customer support to merchants using your platform. This may include troubleshooting technical issues, resolving payment disputes, and answering questions about billing and account management.

Payfac Companies

There are a number of established payfac companies in the industry that offer white label payment processing services to businesses of all sizes. Some of the largest payment facilitators in the industry include:

1. Stripe: Stripe is a popular payment processing platform that offers white label payment facilitation services to businesses around the world. With a user-friendly interface, advanced features, and competitive pricing, Stripe is a top choice for many online merchants.

2. Square: Square is another well-known payment facilitator that offers a range of payment processing solutions, including white label services for businesses looking to accept payments through their own branded platform. Square is popular among small businesses and startups.

3. PayPal: PayPal is one of the most widely used payment processors in the world, offering white label payment facilitation services through its PayPal Payments Pro platform. With a large user base and a range of payment options, PayPal is a trusted choice for many online merchants.

Start a Merchant Services Business

If you're interested in becoming a payfac, starting a merchant services business can be a profitable venture. Here are some key steps to consider when starting a merchant services business:

1. Conduct Market Research: Before launching your business, it's important to conduct market research to identify potential competitors, target markets, and growth opportunities in the payment processing industry.

2. Develop a Business Plan: A well-thought-out business plan is essential for any new venture. Your business plan should outline your goals, target market, pricing strategy, marketing plan, and financial projections.

3. Obtain Licenses and Certifications: As mentioned earlier, becoming a payfac requires obtaining the necessary licenses and certifications required by your state or country. This may involve working with regulatory agencies and industry organizations to meet compliance requirements.

4. Build Relationships with Payment Processors: Building relationships with payment processors is crucial for a successful merchant services business. By partnering with reputable processors, you can offer competitive rates and reliable service to your clients.

5. Market Your Services: Once your business is up and running, it's important to market your services to attract new clients. This may involve creating a website, attending industry events, and networking with potential partners.

Payment Facilitator vs Payment Processor

It's important to understand the difference between a payment facilitator and a payment processor when considering entering the payment processing industry. While both play a role in processing electronic payments, there are some key distinctions between the two:

Payment Facilitator: A payment facilitator, or payfac, is a company that allows businesses to accept electronic payments through their own branded platform. Payfacs typically provide the technology and infrastructure needed to process payments, as well as customer support and other services. Payfacs may work with multiple merchants, or they may focus on serving a specific niche or industry.

Payment Processor: A payment processor is a company that facilitates the actual transfer of funds between a customer's bank account and a merchant's account. Payment processors handle the technical aspects of processing payments, including encryption, authentication, and settlement. Payment processors may work with multiple payment facilitators, as well as with individual merchants.

Payfac vs ISO

Another important distinction to make in the payment processing industry is between a payfac and an ISO (Independent Sales Organization). While both play a role in helping businesses accept electronic payments, there are some key differences between the two:

Payfac: As mentioned earlier, a payfac is a company that allows businesses to accept electronic payments through their own branded platform. Payfacs typically work with multiple merchants and provide a range of services, including payment processing, customer support, and risk management.

ISO: An ISO is a company that acts as a sales agent for payment processors, selling their services to merchants in exchange for commission. ISOs may work with a variety of payment processors, offering a range of payment processing solutions to their clients. ISOs may also provide additional services, such as marketing and customer support.

Becoming a white label payment facilitator can be a lucrative opportunity for entrepreneurs looking to enter the payment processing industry. By understanding the key steps and considerations involved in becoming a payfac, as well as the differences between payment facilitators, payment processors, and ISOs, you can position yourself for success in this competitive and rapidly growing industry. With the right combination of technology, partnerships, and customer service, you can build a successful merchant services business that helps businesses of all sizes accept electronic payments securely and efficiently

White label payment processing refers to a system where a company provides payment processing services to other businesses under their own brand name. The white label provider handles all the backend processing while allowing the client to maintain their brand image and customer relationship.

Benefits of White Label Payment Processing:

1. Brand Recognition: By offering payment processing services under their own brand name, businesses can increase brand recognition and loyalty among their customers.
2. Revenue Growth: White label payment processing can be a lucrative revenue stream for businesses looking to expand their service offerings.
3. Customer Retention: By providing a seamless payment processing experience, businesses can improve customer satisfaction and retention rates.
4. Scalability: White label payment processing allows businesses to scale their operations without the need for significant investment in infrastructure or technology.

How to Sell Credit Card Machines to Small Businesses

Identify Your Target Market:

1. Understand the needs of small businesses: Small businesses have unique requirements when it comes to credit card processing. Make sure you have a clear understanding of their pain points and how your credit card machines can address them.
2. Research your competition: Before approaching small businesses, research your competition to understand their offerings and pricing. This will help you position your products effectively and differentiate yourself from competitors.

Develop a Sales Strategy:

1. Create a compelling pitch: Highlight the benefits of your credit card machines, such as fast transaction processing, secure payments, and customizable features.
2. Offer flexible pricing options: Small businesses may have limited budgets, so offering flexible pricing options can help attract more customers.
3. Provide demonstrations: Allow small businesses to test out your credit card machines to see how they can improve their operations.

Build Relationships with Small Business Owners:

1. Network: Attend industry events, trade shows, and networking meetings to connect with small business owners.
2. Provide exceptional customer service: Establish a reputation for excellent customer service to build trust and loyalty with small business owners.
3. Follow up: After making a sale, follow up with small business owners to ensure they are satisfied with your credit card machines and address any issues promptly.

Benefits of Becoming a Payment Facilitator

Increased Revenue Opportunities:

1. Payment facilitators can generate revenue from transaction fees, set up fees, and monthly subscription fees from merchants.
2. By offering value-added services such as analytics, fraud prevention, and reporting tools, payment facilitators can attract more merchants and generate additional revenue streams.

Improved Customer Experience:

1. Payment facilitators provide merchants with a seamless payment processing experience, including fast transaction processing, secure payments, and customizable features.
2. By offering 24/7 customer support, payment facilitators can enhance the overall customer experience and build loyalty with merchants.

Scalability and Growth:

1. Payment facilitators can scale their operations quickly and efficiently by onboarding new merchants and expanding their service offerings.
2. By leveraging advanced technology and infrastructure, payment facilitators can handle high transaction volumes and accommodate the needs of growing businesses.

Conclusion:

White label payment processing, selling credit card machines to small businesses, and becoming a payment facilitator all offer unique opportunities for businesses to increase revenue, improve customer experience, and achieve scalability and growth. By understanding the benefits of each of these strategies and developing a solid sales strategy, businesses can capitalize on the growing demand for payment processing solutions in today's digital economy.

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