Previously, merchants who wanted to begin accepting credit card and debit card transactions needed to set up an account with a merchant services provider. This service has historically been separate from the software that business owners were using to run the rest of their business. However, now many business management platforms embed payments directly inside their software in order to create a more streamlined experience for their clients and eliminate the need for an additional payment solution. For software platforms that choose to provide embed payments, the process to integrate and activate involves becoming what’s known as a payment facilitator.
The payment facilitator model was created to streamline the process of allowing platforms’ end-users to begin accepting electronic payments without adding extra steps or requiring additional solutions. So what is a payment facilitator and how can it benefit businesses who need to accept payments?
What’s a Payment Facilitator?
The short answer; a payment facilitator (Payfac) is a service provider for merchants. To expand on that, a payment facilitator is a company that allows its customers to accept electronic payments using the payment facilitator’s platform. These account types aggregate funds across many merchants in a pooled master merchant account. Payment facilitators provide online services for accepting electronic payments by a variety of payment methods including credit card, debit card, bank transfer, and real-time bank transfer based on online banking.
Payfacs simplified the enrollment process by creating a sub-merchant platform cutting down the approval process for a merchant account. Now instead of two weeks, it takes 24-48 hours for approval. For software companies who have chosen to become payment facilitators, owning the payment functionality not only gives them a new revenue stream but also enables them to manage payments as a key piece of their customers’ experience.
What’s the Difference Between a Payment Facilitator and a Payment Processor?
At a glance, a payment facilitator and a payment processor seem similar, however, the differences are notable.
Payment processors do exactly what the name says. They provide the systems and technology that process transactions. No more, no less, and are typically a standalone service. Payment Processors are required to maintain Payment Card Industry Data Security Standard (PCI DSS) compliance, and many also provide payment terminals and various security solutions.
A Payment Facilitator on the other hand creates a more streamlined path to electronic payment acceptance for small and medium-sized businesses. In a traditional onboarding model, a merchant must first apply for a merchant ID and sign a direct agreement with a sponsoring bank. A Payfac already has a bank relationship allowing you to work with them instead of the bank, so it’s easier to get approved. The signup process is also easier as it is usually fairly automated, typically Payfac is a service or software you are already using.
Benefits of Using a Payment Facilitator
Payment Facilitation allows a platform to instantly onboard new users and enables payment acceptance as soon as 15 minutes from the submission of the application. In addition to streamlining the enrollment and onboarding process, a payment facilitator offers additional payment processing benefits to sub-merchants including seamless payment integration solutions,
The benefits of using a payment facilitator include the ability to enable all major card types (Visa, Mastercard, Discover, Amex) as well as ACH, E-check, and even Electronic Bill Pay Presentment (EBPP) through one interface. Having a transparent, easy-to-understand fee structure encourages businesses to sign up with a payment facilitator because it eliminates surprise charges and gives merchants the ability to manage their budgets more easily.
Additional Benefits of Using a Payment Facilitator:
- Greater control over your clients’ end-to-end user experience
- Rapid and hassle-free account onboarding
- Simple and transparent flat-rate fee structures
- A reliable and lucrative revenue stream
- Access to seamless integrations and cutting-edge technology
- Eliminates having to use a separate payment software
How Stax Connect Solves Payment Challenges
An alternate payment facilitation model would be a SaaS provider with a web-based payments component. This is where Stax Connect comes into play. Stax Connect provides a suite of accounting features with embedded payment processing and reconciliation all in one place.
Stax Connect allows platforms to integrate and embed payments in 90 days for minimal cost instead of 2 years and $3M. Your business will also have access to a full award-winning support team who can manage payment implementation and operations for you, versus competitors who give you a bunch of documentation and leave you to figure it out on your own. With Stax Connect you can process card-present payments and card not present payments in a single solution. Use the partner portal to provide full reporting transparency right out of the box.
- Card Present Payments – Simplify how you swipe, dip, and tap credit cards and accept contactless mobile payments.
- Easy to Integrate API – Enhance your technology infrastructure with a customizable, feature-rich payments integration.
- Quickbooks Online 2 Way Sync – Auto-sync invoices, catalog items, customer data, and payments between our platform and QBO.
- eCommerce Solutions – Optimize shopping cart and checkout pages with increased functionality, address verification, and automated batching.
- Business Analytics – Access powerful Business Intelligence with real-time and historic financial, inventory, payments, customer data analytics, and more for every location.
- Virtual Terminal – Complement card-present payments and extend your ability to accept payments anytime, anywhere, on any device.
Learn more about Stax Connect and find out more information on how you can quickly get started on monetizing payments today. We will be happy to answer any questions you have and help you leverage the best all-in-one software payment processing solution for your needs.