If you have a software company, you have probably at least considered whether becoming a payment facilitator is right for you. Before you decide though, you should understand both the payfac model and how your expectations and needs fit into it. Not every company will find it works for them. But if you are ready to focus on payment processing for your business, it can be a lucrative opportunity.
What Is Your Focus?
If you are going to be a true payment facilitator, you need to be ready to focus on it in your software programming. After all, you need to develop the mechanism to take payments, collect information, communicate with financial institutions, and gather data provided with credit and debit card transactions. In the midst of it all, you have to create and maintain sophisticated security mechanisms to protect your customers and their money.
How Much Risk Can You Handle?
Another critical aspect of being a payment facilitator is assuming the risk of your sub-merchants. Some businesses and some merchants come with higher risks, and as a payfac, you would take those on yourself. When you focus on payment facilitation, your success or failure depends on how well these clients perform. If they suffer high chargebacks or fail to bring enough business to cover your costs, you stand to lose a great deal.
What Are Your Goals?
These risks, though, find their balance in the potential revenue you can attain. If you develop a successful product and work with strong sub-merchants, you can hurtle past the break-even point and make money on every transaction for as long as the client uses your software. A truly great product can last a long time if you provide updates to keep it both relevant and secure. This leads to powerful income creation, repeatable with every good sub-merchant who purchases your payfac software.
Do You Want to Hedge?
You can, of course, find ways to hedge your bet. A partnership with another software provider or payfac can allow you to split your focus, or even focus entirely on your other software applications while yielding the payment processing to your partner. This reduces your risk, but it does so by shifting your focus to other areas and shifting some of the income available to another company.
Becoming a payment facilitator requires some hard choices, and the ability to navigate a number of regulatory obstacles. If you do take the plunge, though, you have tremendous revenue boosts waiting for you to seize them. Look at yourself and what you are prepared to do. If you have the right focus and development abilities, the payfac model can create impressive financial opportunities for your organization.