8 Advantages of Working With a PayFac-as-a-Service Provider

With many under constant pressure to grow, SaaS businesses are taking advantage of new go-to-market strategies such as usage-based pricing, value-added feature sets, and expansion into new geographies or markets. Representing a tremendous source of new growth, SaaS providers like you are turning to embedded payments solutions like payment facilitation (PayFac) and PayFac as a service (PFaaS) solutions. While both offer the advantages of being a payfac, PayFac-as-a-Service is offered by payment providers and allows non-financial businesses like ISVs and SaaS providers to act as payment facilitators without the upfront costs, risks, and time to market. According to a recent study by Bain & Company, independent sales vendors have the opportunity to address $35 trillion in payments, or 15% of the worldwide total of payments, into their platform. 

What Is a PayFac Company: PayFac Meaning

PayFacs are financial service providers that simplify the process of accepting payments for smaller merchants. Instead of each merchant needing to set up their own merchant account with a bank or payment processor, PayFac businesses aggregate these merchants under their own merchant account. This allows smaller businesses to start accepting payments more quickly and easily, often with less stringent underwriting requirements compared to traditional merchant accounts. PayFacs typically offer services such as payment processing, fraud detection, and sometimes additional features like reporting and customer management.

Advantages of Being a PayFac Using a PayFac-as-a-Service Provider

If you’re looking for new ways to grow while leveraging the advantages of being a payfac, keep reading. In this blog, we’ll dive into the major benefits PayFac as a Service providers have to offer, and why SaaS providers are embedding payments into their software platforms.  

Fast Onboarding for Customers

A Payfac-as-a-Service provider gives software organizations the advantages of being a PayFac with a fast and easy onboarding process, allowing their businesses to start accepting payments almost immediately. By offering an online application process with automated underwriting, the clients of ISVs and SaaS providers can be onboarded quickly—without the need for paperwork and signatures, which can delay the process. This streamlined process maximizes operational efficiency and enables ISVs to onboard more customers in less time. In contrast, setting up a traditional merchant account can be tedious and time-consuming, often taking days or weeks for approval.

Deliver a Better User Experience

Using a PFaaS to become a payment facilitator allows ISVs to seamlessly integrate payment processing into their software solutions, enhancing the value and the experience they offer to their customers. By integrating payments, ISVs provide a comprehensive solution that streamlines operations, improves the user experience, and adds a core, commonly demanded feature that can interoperate fully with the rest of the software solution.

Revenue Generation

Using a PFaaS solution creates an additional revenue stream to complement software subscription sales. By monetizing the transactions occurring on their platform, ISVs can increase their income and business valuation, making them more attractive to investors. In some cases, SaaS businesses make more revenue from monetizing payments than from service or subscription fees—a great advantage of being a PayFac without the upfront costs.

Better Customer Experiences

Using PFaaS to become payment facilitators, ISVs have more control over the end-to-end user experience. They can shape the payment process to align with their software, user interaction flows, and brand, ensuring a seamless and cohesive user experience. This control leads to an overall better customer experience, resulting in increased customer satisfaction and loyalty.

Reduced Risk for Customers

By using a PFaaS to become a payment facilitator, ISVs do not have to take on the responsibility of compliance, fraud prevention, or data security. With PFaaS, the provider takes on the majority, if not all, of the risk, giving the ISV or SaaS platform all the benefits without the difficulties. ISVs and SaaS businesses get added peace of mind, and the PayFac-as-a-Service provider is accountable for managing payment back-office functions, further enhancing security and risk management. 

Cutting-Edge Technology and Scalability

With PFaaS from a PayFac-as-a-Service provider, ISVs can leverage any payment technology, from credit cards to ACH to digital wallets. By providing merchants with innovative payment options, ISVs enhance the overall customer experience and help their clients stay ahead of the competition. Investing in scalable technology ensures the ability to ramp up services quickly as the business grows, supporting startups to large merchants. 

Compliance Benefits

Compliance tasks encompass various aspects, including Know Your Customer, PCI compliance, and tax reporting. Businesses partnering with a PFaaS benefit from reduced compliance requirements compared to obtaining a traditional merchant account. The PayFac-as-a-Service provider assumes a significant portion, if not all, of the compliance responsibilities, streamlining the process for ISVs and SaaS businesses. 

Get Excellent Support for You and Your Customers

PayFac-as-a-Service providers offer a range of services, including merchant onboarding, transaction processing, and fund disbursement— but an especially important service is customer support. Support is a huge differentiator in the payments space, and a best-in-class PFaaS solution will offer excellent, personalized customer support along with deep payments expertise. It’s just another one of the advantages of being a PayFac that comes with working with a PayFac-as-a-Service provider.

Interested in gaining the advantages of being a PayFac without all the upfront costs and risks? We’re here to help you navigate the process of embedding payments using our PayFac as a Service solution. Just get in contact with us and/or book a meeting through this form, and we’d be happy to help. Read about our PayFac-as-a-Service offering available for software partners, or contact us today.