Would you like to have a cottage somewhere in the mountains? From there you could go hiking and, perhaps, skiing with your friends and family. Plus you could rent it (or part of it) to other people, who also want to go to the mountains and need some place to stay. And if you feel like it, you could even open a small mountain resort there. Transform your cottage into a small hotel. Or just do a couple of adjustments to become a better host for your customers. Opening an alpine resort is a manageable task, if you already have some property in the mountains or close to them, isn’t it?
Similarly, if you have a SaaS platform, you can consider it a piece of property which you are subletting to your customers. Well, let us assume, a SaaS platform is your alpine cottage. In this case, when you decide to become a PayFac, you are upgrading your cottage to the rank of a private resort.
The point is that as a SaaS platform provider, you already have a lot of PayFac-specific logic in place. You already have an established customer base consisting of your platform users. If you already hosted some people in your cottage, they will, probably, be the first visitors of your mountain resort. Similarly, existing users of your SaaS platform will become your sub-merchants. Your platform also features some know-your-customer (KYC) functionality for initial background verification. (You wouldn’t let some suspiciously looking guys stay into your cottage, would you?)
When you are opening a hotel in the mountains, you need to register as an official business. You also need to improve the security of your property and think of the mechanism to smoothly manage payments for your services. Similarly, the task of becoming a payment facilitator involves two key aspects: business and technical. Business aspect is about finding an acquiring bank to underwrite you as a PayFac. Prior to starting any integration and development works, you need to get all necessary specifications from your acquirer. Technical aspect is about finding a technology (platform) that will allow you to smoothly fund merchants and mitigate risks (associated with chargebacks and fraud).
In order to handle the technical aspect of the task, you can choose one of the three following options.
- Pay for some third-party platform-as-service.
- License some ready-made technology and customize it according to your needs.
- Extend your existing SaaS platform by adding PayFac-specific functions.
But what if you do not feel like you can fulfill all PayFac-specific requirements all at once? Well, you can start with white-label PayFac model. (PayFac in the box, virtual PayFac, managed PayFac are other names for similar try-it-before-buy-it solutions). The major benefits of white-label PayFac model are: less responsibility and significantly lower upfront costs. (Well, you are not obliged to turn your mountain cottage into a five-star hotel in one go, right?) White-label PayFac solutions are offered by some modern platforms, such as UniPay Gateway.
Naturally, these are just the most general conceptual points, related to becoming a PayFac for SaaS platforms. If you need more specific information regarding your particular case, you are welcome to consult payment experts at UniPayGateway.com.