The issue of collecting payments from your clients will certainly come up, whether you’re starting a new e-commerce platform or growing your existing one. The UniPay solution at your disposal is the deployment of a payment facilitator, commonly referred to as PayFac or PF. The following discussion will go into the world of payment facilitators as a service, carefully examining the benefits and cons of each to enable you to make an informed decision.
Defining a Payment Facilitator
Businesses that facilitate payments for their consumers operate in this space. They expand their infrastructure to help startups and smaller companies start selling without going through the time-consuming and costly process of opening their merchant account.
A distinguishing characteristic of payment facilitators is assigning a unique sub-merchant ID under the master account to each client. The onboarding process is greatly facilitated by this modernized method.
While payment gateways and processors traditionally bridge merchants with financial institutions, payment facilitators distinguish themselves by focusing their operations on the merchant as the primary customer, often filling a role akin to that of a retail marketplace or e-commerce services.
Payment Facilitator as a Service: The Mechanism
For smaller businesses, known as “sub-merchants,” the Payment Facilitator acts as a reliable mediator within the financial transaction ecosystem, streamlining the process of accepting payments online. PayFac plays a crucial role by establishing a special merchant bank account with a unique Merchant ID (MID). The primary function of this account is to aggregate and consolidate payments from several independent sellers.
The noteworthy distinction here is that sub-merchants are relieved of the intricate and time-consuming task of procuring their individual MIDs. Instead, their transactions merge seamlessly into PayFac’s central merchant account, sub-merchants’ finance processes are streamlined, and they can get their products on the market faster.
In addition, PayFac manages the entire payment cycle, from onboarding new sub-merchants to facilitating transactions to ensuring safe and effective cash transfers. A payment processor makes This elaborate synchronization possible, which handles all the nitty-gritty aspects of each transaction.
Sub-merchants may save time and effort in the long run by teaming up with a payment facilitator rather than setting up and maintaining their merchant accounts for accepting online payments.
Payment Facilitator vs. Payment Processor
Despite their frequent synonymy, the terms “payment facilitator” and “payment processor” pertain to two distinct services within financial transactions. It’s crucial to differentiate between the two, as they play pivotal roles in the intricate payment processing landscape.
As a fundamental function, payment processing is typically overseen by an integrated payment processor. This entity serves as the linchpin in the payment ecosystem, efficiently handling the intricate task of managing and facilitating transactions. The payment facilitator establishes a vital connection between the integrated payment processor and the merchant account.
In stark contrast, a payment processor engages directly with businesses, assuming the pivotal role of overseeing payment operations, whether on the business’s e-commerce platform or at a physical point of sale. This direct collaboration empowers businesses with much control over their payment processes, ensuring a more hands-on approach to transaction management.
Now, let’s explore the distinct advantages each entity offers. Opting for a payment facilitator presents a streamlined approach to onboarding and underwriting services, simplifying the often intricate process of setting up payment capabilities for businesses. On the other hand, engaging a payment processor offers enhanced flexibility, allowing businesses to tailor their payment processing methods to align precisely with their unique operational requirements.
In conclusion, while “payment facilitator” and “payment processor” may seem interchangeable at first glance, their roles and functions are markedly different, each bringing its advantages to the table within the complex realm of financial transactions.
Will A Payment Facilitator Service Work For You?
Could the PayFac model align with your specific needs? Small businesses and sole proprietors undoubtedly find a range of advantages when using it. It affords the privilege of expediting product and service sales, bypassing the protracted approval procedures associated with establishing a standalone merchant account. Payment facilitators also handle the complexity of underwriting and save time by using automated technologies for quick assessments.
Individual merchants also benefit from risk assumption by the payment facilitator, who owns the merchant account. This translates to relief from concerns like PCI DSS compliance, as the payment facilitator shoulders this responsibility on your behalf.
While payment facilitators offer numerous advantages for accepting online card payments, it’s also essential to consider bank debits. With GoCardless, retailers of any size can accept payments straight from their customer’s bank accounts, providing an alternative payment option. It’s easy to set up and gets approved quickly, letting you set up recurring and one-time payments for your invoices and tailoring the payment pages to your ever-evolving brand.
The Advantages of the United Thinkers Payment Facilitator Program
PayFac companies operate in diverse modes, encompassing full-fledged payment facilitation, hybrid PayFac, PayFac in a Box, or the white-label payment facilitator model.
As you contemplate becoming a payment facilitator, rest assured that you can select the model that best suits your business use case. You don’t need to shoulder all liability or fulfill all requirements simultaneously. Present-day facilitators, such as United Thinkers, have simplified the path to becoming a payment facilitator.
UniPay Gateway, United Thinkers’ omni-channel payment system, includes a comprehensive payment facilitator program. Some might describe this offering as PayFac as a service. We provide full automation of merchant lifecycle management, from underwriting and onboarding through risk analysis and financing.
With our adaptable model, you can delegate specific PayFac responsibilities to our team, tailoring the arrangement to your precise needs.