Frictionless Onboarding With PayFac As A Service


The phrase ‘Know Your Customer (or KYC) is one of the most important adages to live by in business – and if you’re a business, SaaS or otherwise, that has considered PayFac to leverage payment advantages for your customers and yourself, you’ll know how vital of a motto it is for your organization.

We’d like to suggest another phrase for you to think about here, though: CYA. (three guesses what that stands for.) As payment processing solutions continue to grow with lightning-fast speed, making sure that you’re aware of the significant and numerous risks involved when it comes to payment processing is of paramount importance.

So that’s why it’ll be music to the ears of business owners that there are options that can help you safely mitigate those risks. Options that involve hybrid aggregation of Payfac mechanisms – also known as Payfac as a Service – can help you to prevent risk for both your customers and your organization.

How Does It Work?

With the notable potential revenue streams that are opened up to your business when you have true Payment Facilitation integrated into your business, as well as the increasing trends towards higher rates of payment integration, it’s clear why more and more businesses are embracing Payment Facilitation for their SaaS platforms.

When your business becomes a PayFac, you become the merchant of record for your user base, allowing your SaaS platform the capacity to process credit and debit card payments for your customers – as well as, in some situations, ACH payments.

By doing this, your business develops the ability to provide seamless, frictionless onboarding for new customers and a quick and easy enrollment process that can take users mere minutes to complete. The most notable payment service providers out there, huge names like Paypal, Stripe, and Square, can onboard their customers pretty much instantaneously, and are also able to supply their clients with underwriting support and payment acceptance tools. Therefore, any smaller SaaS applications need to be able to offer a comparable, if not better, service, to compete.

Sounds Good – But Is It Worth The Risk?

Although frictionless onboarding and a quick enrollment process is a huge draw for true Payment Facilitation, it’s also important to note that it can raise your exposure to risk from a few different types of fraud. Card Not Present fraud (or CNP fraud) for example, is very much on the rise and can cost businesses huge amounts of money.

In the Payfac model, the difference in the Payfac’s payment processing cost and the rate they sell it to their user base is where the revenue is generated. Naturally, trying to maximize this revenue is a top priority for most businesses, and attempting to do so while mitigating all of the risks around it is one of the hardest aspects of becoming and remaining a SaaS that integrates Payment Facilitation.

Besides, Payfacs are not able to mitigate risk in the same way as large companies can. Unfortunately, the fact of the matter is that Payfacs don’t contain an underwriting process with which to vet their customer base – oftentimes, all they have to rely on is the hope that nothing bad happens when they start processing payments. Not ideal. In these instances, there’s nobody who’s able to assume liability for fraud and any other issues or concerns, in the same way, that there is for companies that seek to partner with a larger payments company.

Also, while introducing the idea of payment processing to your SaaS customer base is both easy and appealing for them, being able to onboard them can be a little more hassle. They will be subject to several verifications on sign-up, which can be a little bit onerous. For starters, verification that they’re real users is naturally paramount. This can take q decidedly non-frictionless bent, through a multi-layered process that helps your company verify that you aren’t dealing with a fraudulent individual or company which could leave you high and dry as the merchant. With increases in security, verification authenticity is becoming more and more complicated and difficult – especially if you’re a web-based platform.

After this, you have to be able to verify that the customer you’re working with is the owner of the information that they’re providing you, the merchant, with. After this, you’ll then have to confirm that they’re the right fit for your company and for your payment services, per the services that they’re providing to their customers.

Furthermore, making sure you’re able to service each of your customers comprehensively, by considering each of their individual needs during the onboarding process, is vital. You then have to be able to square your projected revenue benefit with the risk that you take on when you accept the customer.

The Bottom Line, and PayFac As A Service

As such, Knowing Your Customer (and Covering Your… ahem) takes a massive amount of information obtainment and verification, with a large element of having to follow fraud prevention rules, too. By not following these regulations, there can be serious financial consequences for your business. And while the quick client onboarding that comes with payment facilitation can be an attractive prospect for businesses, for the majority of companies it can be an endeavor that’s not worth the risk.

However, there is another way. With PayFac as a Service, you operate a hybrid payment facilitation model which offers a huge amount of the benefits of true payment facilitation, but with much lower risk, as well as lower financial outlay and time spent in development and integration.

PayFac as a Service offers robust potential for revenue generation, while simultaneously allowing your company to work with a business that takes on the burden of risk and compliance, meaning you can breathe easy while the money rolls in.

For further information about Payfac as a Service or to discuss your integration needs more with an industry expert, contact Agile Payments today. With almost twenty years in the payment integration game, we know how to help your business get the results that it needs to thrive. Get in touch now.

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