PayFac Model

Are you a software platform that wants to generate a revenue stream from payments in addition to your core product? Are you a franchise owner that wants to make some money on payment services? Are you a private equity or venture capital firm that has an established customer base of startups in need of payment functionality? Are you an individual or wholesale ISO that wants to add value to its offering and participate in merchant lifecycle?

This list is not exhaustive. If you have an established customer base and decide to manage payment experience for your customers (for a reward, of course!), you can enjoy the benefits of our payment facilitator program!

Benefits of United Thinkers payment facilitator program

Payment facilitator model is becoming increasingly popular. The reason behind such popularity is simple: the model allows software platforms and other companies to partake of merchant services revenues.

Present-day PayFac companies operate in different modes. They include full-fledged payment facilitation, white label payment facilitator model, hybrid PayFac, or PayFac in a box. So, if you decide to become a payment facilitator, you can choose the model that is most suitable for your business use case. There is no need to assume the full burden of liability and try to fulfill all the requirements at once. Nowadays, thanks to companies like United Thinkers, becoming a payment facilitator might be easier than you think.

United Thinkers offers an elaborate payment facilitator program as part of its omni-channel payment technology UniPay Gateway. Some might call this part of the offering PayFac as service. In essence, we are offering complete automation of the whole merchant lifecycle management. From underwriting, onboarding, and risk assessment to funding and more.

Our flexible model allows you to choose how many of PayFac-specific responsibilities you want to delegate to our team. For instance, we:

• offer a complete ready-to-operate white-label platform.
• assist you with merchant underwriting, KYC processes, background check, and risk assessment.
• provide a special API for instant merchant onboarding, complete with ready-made onboarding forms. Any merchant can start processing the instant he completes the form and subscribes to payment facilitation services.
• generate transparent branded merchant statements bearing your company’s logo.
• provide fully automated mechanisms for collection of merchant services fees.
• support various configurations.
• ensure honest and transparent revenue sharing. We will be happy to share the revenues from payment processing with you. Finally, you will be able to make money on payment processing and payment facilitation services.

Do you intend to become an international payment facilitator? Well, here is some good news for you. Our PayFac program allows you to provide merchant accounts in both the US and Canada. At the same time, our white label solution can be used in other countries if you have acquiring partners in respective geographies.

Consult our experts and explore the benefits of our omni-channel payment facilitator platform! Learn how to make our PayFac program work for your specific company!

Who can benefit from UniPay payment facilitator program

The top candidates for PayFac model implementation are businesses with multiple clients, that provide products and services to end users. These multiple clients can easily become their sub-merchants.

Examples of such companies include:

• Software platforms and SaaS companies;
• Franchisors;
• Online marketplace owners;
• ISOs;
• Private equity and venture capital firms.

However, like we said, the list is not exhaustive.

Evolution of payment facilitator model

Originally, prospective merchants had to get merchant accounts directly from payment service providers or PSPs. A PSP was, usually, an acquiring bank. Later on, as the number of merchants increased, acquirers delegated part of the task to independent sales organizations. However, ISOs just resold merchant accounts and did not take part in merchant lifecycle. As a result, merchant onboarding and underwriting was a long routine. It took time and involved lots of paperwork.

Eventually, acquirers realized that onboarding every single applicant separately was not worth the trouble. They delegated the task to new middlemen for a part of merchant services fees. So, a new type of entity, called a PayFac, emerged.

The meaning of PayFac model is that PayFacs actively participate in merchant underwriting, background verification, monitoring, funding, reporting, chargeback management. A PayFac underwrites multiple sub-merchants under a single MID. If you are underwritten as a merchant by a PayFac, you can start processing in a matter of hours after application submission.

The arrangement is beneficial for all the interested parties: acquirers, PayFacs, and their sub-merchants.

• Acquirers no longer have to dedicate time and effort to merchant underwriting and onboarding processes.
• PayFacs receive their rightful share of merchant services fees.
• Merchants get smooth and seamless payment management experience.

Overall advantages of PayFac model

1. Wide range of functions. PayFacs perform a wider range of tasks than ISOs. ISOs mostly resell merchant accounts, issued by multiple acquiring banks. Besides that, a PayFac takes an active part in the merchant lifecycle.
2. Consolidated volume and unified operations. An ISO, usually, partners with many acquirers and processors. That’s because it wants to be able to refer merchants from different industries to acquirers supporting the respective MCC codes (for a modest fee). However, a PayFac prefers to be a partner of one or two acquirers only. Thus, in contrast to an ISO, it can consolidate transaction processing volume and unify internal processes.
3. Better processing terms and higher revenues. It becomes more lucrative for a PayFac to offer merchant, gateway, and other services in one package and to support a single acquirer/processor. As a result of the first two advantages, a PayFac can negotiate better processing terms (lower fees) for its sub-merchants and get its rightfully earned part of residual revenue.
4. Accessibility of PayFac model for many types of companies. These include independent software vendors (ISV), SaaS platform providers, franchisors, and (lo and behold!) ISOs. If you have a customer base, then why not become a PayFac and make some extra cash on diversified merchant services?
5. PayFac model increases the company’s valuation. Most software and SaaS platforms belong to “growth companies”. They regularly go through valuation process and attract new investments based on increased valuation. The company’s estimated value is based on its annual revenue. Implementation of PayFac model creates a new revenue stream and, thus, increases the bottom-line annual revenue of the company, leading to valuation growth.
6. Platforms and acquirers offer PayFac programs. Seeing the growing popularity and benefits of the PayFac model, processing platforms and acquirers also take a step towards it. More and more of them start offering PayFac programs to those willing to implement the payment facilitator business model.