SaaS platform owners are among top candidates for becoming payment facilitators. Other candidates include independent software vendors, online marketplaces, and franchise owners. All these business models (including SaaS model) have “know your customer” logic. They also have established customer bases. So, they are already on the way to becoming PayFacs.
Now, let us consider the options of SaaS companies that want to participate in electronic payment processing.
SaaS Platform Prospects
A traditional SaaS platform develops and sells payment software products. So, it lives mostly on revenues coming from software licensing and subscription fees.
Presently, SaaS companies can get some additional revenues from transaction processing. For this purpose, they do not have to take MC and Visa interchange fees from card networks. However, a SaaS platform can get its rightful reward if it assumes the liability for merchant underwriting. It does not have to become a payment processor but it can become a PayFac and get its share of processing fees.
Payment Facilitator Model for a SaaS Platform
On the one hand, participation in merchant credit card processing as a PayFac is a lucrative prospect. On the other – the process of becomi