Managed PayFac or Managed Payment Facilitation – 2020 Guide
A Payment Facilitator [Payfac] is essentially a Master Merchant that processes credit and debit card transactions for sub-merchants within their payment application.
These clients or sub merchants don’t have to go through the traditional merchant account application process and can typically enroll and begin accepting customer payments in hours. This instant onboarding can be a powerful customer acquisition tool and is how Square has been able to grow so significantly.
Becoming a true PayFac or PSP [Payment Service Provider] can be a great fit for businesses that fall into the software provider classification and particularly SAAS business service providers.
While there are certainly many benefits of being a true PayFac there are also significant financial requirements, compliance obligations and ongoing operational demands. For a thorough overview of these risks/rewards read Payment Aggregation: Is It Right For Me?
These prerequisites to true aggregation often leave out the SAAS provider that does not have the financial or staffing wherewithal or does not want financial risk exposure.
Fortunately there are now Managed PayFac or Managed Payment Facilitation solutions that offer the many pros of true aggregation without the very significant investments of time and money.