In spite of pandemic-driven economic recession, payment facilitator model is thriving. So, revenues of PayFac payment platforms remain high. At the same time, more companies are implementing PayFac model and establishing PayFac payment gateway partnerships. These companies include owners of SaaS platforms, franchisors, ISO, marketplaces, and venture capital firms.
Owners of many software platforms face the need to embed payment experience into their core offerings. This step allows them to boost their image and make some money on payment facilitation. And, most important, it makes payment handling smooth and seamless for both merchants and customers. PayFac payment platforms can manage the whole merchant lifecycle. From underwriting (merchant account issuance) to funding and chargeback disputing. That is why, the motto “payments for platforms” remains as relevant as ever. Especially, for software service platform providers and other companies with established customer bases.
Let us consider an example. A software platform, servicing a network of beauty and spa salons, partners with a gateway. So, this gateway smoothly and securely manages payments and subscription plans of the salons’ customers. As a result, the platform becomes more competitive, while customers get improved payment experience. However, if the platform decides to switch to PayFac model, it can also get an additional revenue source. So the salons it services can become its sub-merchants and pay respective fees. In the latter case, the platform owner should look for a PayFac payment gateway. That is, the gateway, capable of accommodating all PayFac-specific features it requires.
Gateway Selection Tips for SaaS and PayFac Payment Platforms
In order to provide value for money and, at the same time, smoothly and securely manage payments, the gateway should satisfy several criteria.
Basic Features – Relevant for Everyone
Basic criteria are as follows.
- Transaction pricing. Many businesses do not even know how much they are actually paying and what services they are getting in return. So, the simple rule of thumb is: go for transparent pricing models and reasonable gateway fees. For detailed guidance you are welcome to consult our processing cost reduction guidelines.
- Integration-related efforts. It takes from several weeks to several months to deploy and certify a gateway product. Everything depends on your particular target feature set. And, perhaps, on the distribution of tasks between you and the gateway provider.
- Settlement (capture) arrangement. Who is going to perform the settlement of transactions? You (terminal capture) or the gateway (host capture)?
- Supported payment types, currencies, and geographies. Keep in mind, that new payment types are growing in popularity. To name just a few: ACH, card-present, CNP, gift cards, crypto, in-app payments, e-wallets. Which of these payment modes are relevant for your platform?
- Security features. Which consumer and merchant fraud protection methods are implemented within the gateway? AVS, P2PE, 3Dsecure are just several examples.
- Reporting mechanisms. Are all the data fields you need published in the reports?
- Management of refunds and chargebacks.
Since we are describing SaaS and PayFac payment platforms here, advanced gateway features are no less important than basic ones. Here they are.
Advanced Features – Especially Relevant for PayFac Payment Platforms and SaaS Companies
- Support for recurring billing. Are you a subscription-based business? If you are, this feature applies to your SaaS platform.
- Account updater logic. Indeed, many transactions are declined because customer data is not updated in time.
- Taxes and convenience fees. Can the gateway automatically deduct or withhold the required amounts?
- Card (or should we say, account) intelligence. Monitoring of customer behavior is a crucial component of agile pricing and consumption-based billing.
- Seamless merchant underwriting and onboarding. This one is relevant for both PayFac payment platforms and SaaS businesses on their way to becoming white-label or full-fledged PayFacs.
- Multiple processing partnerships. Even a large processor might not be able to support all your target MCC codes, currencies, geographies, and payment types. So, sometimes, only multiple processing relationships can cover the whole spectrum of your needs.
Both SaaS and PayFac payment platforms should be careful when choosing payment gateway partners. So, our advice is to opt for highly customizable open-source gateway products that can be easily adjusted to any newly emerging needs.
Don’t hesitate to contact our payment specialists for more information on robust payment gateway solutions for SaaS and PayFac payment platforms.