A friend of mine was once telling me that there was no point in buying an accommodation of your own. Back then he thought that renting was a much better option. No significant upfront costs to incur, mortgages to pay, repairs to make, or responsibility to assume. Plus, you are free to go and change the accommodation at any time. The point makes sense. After a few years this same friend purchased an apartment for himself and was producing arguments in favor of this move. The apartment is yours, you do not have to pay the rent, just the utilities, you can design the interior any way you want, etc. Well, every solution has its time.
Many companies that want to make money on merchant and payment facilitation services find themselves in a similar situation. Let us say, you want to become a payment facilitator, but are unable to meet all the requirements and assume all the responsibilities imposed by PayFac status. In this case, for a time, you can resort to white-label payment facilitator model.
Being a white-label payment facilitator is like living in a rented apartment. You can invite guests to your place, and they will not care much whether you own it or rent it. Similarly, a white-label payment facilitator model allows you to perform the key PayFac-specific functions without actually becoming a PayFac. Only you will be performing these functions “under the umbrella” of a larger entity. This “landlord” is, usually, a payment service provider, or a full-fledged large-size PayFac. But your “guests” (end users of your platform) might not even know about its existence.
If you are a white-label PayFac, e-mail notifications, merchant statements, reports, and other outgoing documents bear your logo. So, in the eyes of end users, the service is provided by your payment platform. However, from technical viewpoint, it is actually provided by the larger PayFac or PSP (the “landlord” or “host”). Of course, as a white-label payment facilitator, you won’t be able to take the maximum profit out of merchant services, as part of it will have to be shared with the payment service provider.
Buying an apartment without sufficient experience and knowledge of the market is not a good thing to do. You might buy an apartment and then realize that you have noisy neighbors. Or your rear window is facing a row of dumpsters. Or the neighborhood itself is a seedy one. When you are renting an accommodation, you are gaining this valuable experience. And then, when it comes to your own property purchase, you are able to make a truly informed decision. Similarly, for prospective PayFacs a white-label solution might be the best option to start with. You can become a white-label payment facilitator and gain experience. Or you can spend a lot of money to get a PayFac status, and then realize this costly move does not bring desired results. The choice is yours.
For some businesses white-label payment facilitation model might be a long-term solution. For others, it may be the first step towards becoming a full-fledged PayFac. White-label solutions come in different flavors. So, if you feel confident enough, you can always license a payment solution, or take a hosted solution in-house and customize it as you find appropriate. White-label payment facilitator program is offered by several modern payment management platforms, including UniPay Gateway and others. Feel free to consult the specialists for details.