Payment Facilitator Solutions are often a great fit for SaaS platforms.
HealthCare applications with payment solutions are often interested in Payment Facilitation because of the frictionless onboarding experience.
Payment Facilitation allows the HealthCare SaaS application the ability to accept payments on behalf of its end users. The platform users complete a simple application and in minutes can begin accepting credit cards and in some cases ACH Payments.
This ability to onboard clients without having the user apply for a traditional merchant account [that can take days and require supporting documentation like bank statements and tax returns] offers a friction-free onboarding experience.
In HealthCare there can be multiple owners and having them complete a traditional merchant application can cause delays and in some cases are a deal-breaker. Allowing a clinic to enroll with minimal information and leverage the payment solutions immediately is a primary customer acquisition tool.
HealthCare platforms are also concerned about data protection and privacy. Payment Facilitation providers offer data privacy and protection as well as handle sensitive payment data.
Payment Facilitation at its core offers instant onboarding of platform users. If that is not an absolute necessity there are alternatives that better meet needs. See Payment Processing Partnerships.
Pros and Cons of True Payment Facilitation
First the disadvantages to the Payment Facilitator model.
- Potential financial risk of financial
- Payment related customer support burdens
- Integration and tech demands
- Approval process to become a PSP can be somewhat burdensome
- Compliance with KYC/PCI and potential tax reporting
- See video: Becoming a PayFac – What can go Wrong?
The advantages to the Payment Facilitator model
- Speed of boarding process: Being a Payment Facilitator allows you the ability to setup sub-merchants very quickly.
- Customers love that it is simple to get the account going with no paperwork or documentation burdens. This dramatically improves the client boarding process.
- Flat fee structure: Easy to understand flat fees for your merchant customers. No needs to understand interchange tables.
- Earnings: Master merchants are able to earn money from network and transactional fees, and potentially float. This is the big one for most SaaS platforms contemplating going the facilitation route.
Revenue is derived simply from the difference in buy rate from the processing networks and the sell rate charged to the end customer. For illustration, if a Payment Facilitator knows their true overall cost amounts to 2.4% of processed volume and they sell at 2.9% their margin is .5% of dollars processed. If they process $10,000,000 per day that works out to $50,000 in revenue per day. Very attractive business model and you might say sign me up.
In the past, there was only the full-blown Payment Facilitation option. The platform would need to spend well over $100k and 6 months integrating and being vetted to qualify.
Today Managed Payment Facilitation Solutions exist and these allow the Property Management Platform the ability to instantly onboard without all the expense and risk.
Contact us to discuss your needs around Manage Payment Facilitation.
