“Bears are taking over the stock market”. According to many experts, after almost a decade of bull market, we are entering the bearish zone. During this past decade most investors just bought stock only to sell it at higher price a little later. Alas, “buy low, sell high” formula does not work that well any more. The cruel reality is: hungry bear might be staring into the stock market players’ eyes in a short time. Presently, investors have to start thinking about the details, adapt to new rules of the game, and invent fresh formulas to follow.
A similar situation is witnessed at the merchant services market. Many companies want to make more money on merchant services. In order to increase their profits, they try to become payment facilitators and gateway providers. But if you are starting a PayFac or payment gateway project, problems emerge where you least expect them. And the devil is hiding in the details.
Let us consider a common example.
Say, initially, company A was successfully using some third-party gateway. Their business operation volumes kept growing. And all they had to do was follow relatively simple routine. The situation could be loosely described as “bull gateway services market”.
Now, the company wants to become a payment facilitator or a gateway provider for other merchants. The management thinks that the right thing to do is just purchase a gateway and keep “riding the bull” as before. Only without having to pay gateway and some other fees. Too much wishful thinking…
In fact, those who never tried becoming a PayFac or gateway provider, might, potentially, face a hungry bear, and even get bitten. “Bear bites” mean unexpected bureaucratic procedures, new specification requirements, and limitations of acquirer’s platform, which are specific to PayFacs and gateway providers. Plus, your project might hibernate, like, again, a bear in winter, if you are stuck with time-consuming integration and development tasks.
The good news is you can avoid bear bites and bear naps if you follow some simple rules.
The 4 steps to take for a prospective payment gateway provider are as follows.
- Find an acquirer.
- Get specifications from this acquirer.
- Develop a mechanism to get an entry point into the banking system.
- Install your gateway into a PCI compliant environment.
If “thou puts the wrong foot before” and violate the sequence of steps, you might get bitten by a bear.
The 4 questions you should answer before becoming a PayFac are as follows.
- How will merchant IDs be assigned? (Are they going to be pre-reserved? Assigned on per-merchant basis or in batches?)
- Which connectivity means do you need (if any) in addition to Internet connection?
- What kind of data do you want to see in reports and statements?
- What terminal solution are you going to apply (if any)?
Bear market is unforgiving and merciless to newbies. No matter, whether we are talking about stock or merchant services market. So keep your eyes open. Follow the new rules of the game. And you will still be able to claim your reward and avoid unnecessary losses of time and money.