Becoming a payment facilitator can open up new revenue streams for software developers. Still, the process requires more than just adding a widget to your software offering. The payfac process demands a serious time and knowledge investment. You need to focus on developing and growing into an industry that operates differently from most of the work you do. Overcoming the following challenges will be key to your success.
Getting Up to Speed
Your biggest gap probably sits here. You have been writing software code for a niche in your industry and do it well. Now, you want to help your customers collect payments through your software as well. Before you can do so, though, you have to operate within the legal and regulatory structure of the payments industry. You need to learn and adhere to the rules for the major payment clearinghouses. Your payment processing must meet the rigid security requirements of the payment industry.
To become a payfac, you must get caught up with industry knowledge—and then stay caught up when new legislation or regulations affect you. The software code you create has to line up with tax codes and cybersecurity requirements. Be prepared not only to learn a lot right away, but to remain in a state of constant learning for as long as you operate.
Securing Adequate Funding
Once you pass the learning hurdle, you need to get your up-front investment in place. Many software development companies depend on investors to get their products off the ground. Becoming a payfac is like launching a new product; you will have significant up-front costs. If your business plan does not include payment facilitation, you may have an uphill battle.
Developing to become a payfac demands that you are in it for the long term. The immediate costs will be significant. Still, the opportunity you gain by signing merchants up under you can pay for it many times over. You just have to get the initial investment and prepare to work to recoup it.
Before the investment pays off, you need your end customers to buy in to what you are selling. You need to convince enough customers that running payments through your software is cost-effective and efficient for their business. What feels like a no-brainer to you depends on customers understanding the benefit to them.
For this to pay off for you, you need enough customers to use your payfac capabilities for your revenues to outgrow your costs. You need to market effectively by educating yourself and then your customers on what you are offering. Take the time to work through the roadblocks to marry your SaaS offering with payfac capabilities. Doing so gives you a chance not only to make more sales, but to open a long-term revenue stream that can greatly bolster your bottom line.