Facilitate To Innovate: How Payment Facilitators Enable The Economy

Traditionally, businesses that wanted to start accepting debit and credit card transactions had to open accounts with an acquirer. However, technological advancements have enabled firms to embed payment services into their software, creating new products with value-added tools and a smoother customer experience.

Many payment facilitators, also called payfacs, such as Braintree and Stripe, help merchants accept electronic payments, making them an essential part of any online business.

This post digs deep into why payment facilitators matter, their features and benefits, and how Spell helps payfacs to stand out and play their 'A' game.

What is a Payment Facilitator?

A payment facilitator is a service provider that enables clients to accept payments more quickly and efficiently.

Payfacs ease the enrollment process, reduce merchant account approval time, offer value-added tools, and aggregate funds from multiple payment channels into a single account.

Traditionally, setting up a merchant account involves the tedious process of acquiring a MID (Merchant ID). With a payment facilitator like Amazon Pay, you don’t have to go through this arduous process with the acquirer since they offer sub-accounts to their retailers to run their payments under Amazon Pay’s master merchant ID.

Why Do Payment Facilitators Enable the Economy?

In our opinion, payfacs are an extremely valuable concept in the payment industry and the market in general because they allow payment businesses to manage their infrastructure layer, enabling them to build and offer new tools, and to control contracts, pricing, and settlements independently.

That’s why the payment facilitation model is critical to shorten the innovation cycle in a very sophisticated payments landscape and enable changes that might otherwise get stuck in the daily complexity of the payments world.

What’s more, payment facilitation allows you to achieve the following goals:

• Create and control your toolkit with seamless customer journeys and experiences;
• Accelerate onboarding by cutting the underwriting process to start accepting online payments faster;
• Build your data science tools around the new tools and get unique market insights to build advanced business strategies.

Spell platform has already covered each of these payfac advantages technologically and offers affordable global access on a SaaS basis. Cool, right? When you have the top engine in place, there is only one question left…

How Can My Company Become a Payment Facilitator?

Becoming a payfac is undoubtedly a difficult but extremely rewarding challenge. However, having a technological partner like Spell makes achieving the goal of becoming a payment facilitator much easier.

You just need to find the right acquiring partner and convince them that the payfac model makes business sense for your project and you’re capable of executing it, controlling anti-money laundering risks.

To prepare for the negotiation with the acquiring partner, you must address the following vital items.

1. License

Being a payment facilitator isn’t just about generating income from payments. There are policies you must follow when underwriting sub-accounts.

That’s why, to have a chance to get a payment facilitator’s MID, you need to have a payment institution license in place. Note that relevant licenses may have different names depending on the country of regulation and the specific level of authority: payment service provider, payment institution, electronic money institution, money service business, etc.

It is required because, as a payfac, you’ll be able to customise things based on the field and country your clients work in, their size, and risk tolerance.

Nevertheless, you must ascertain that there are criteria concerning the following:

• Conducting checks on their web pages
• Gathering and assessing Know Your Client and Know Your Business information
• How to deal with ownership changes
• How to deal with business practices changes
• Conducting manual application review

2. Product

Nowadays, acquirers are very cautious about issuing payfac’s MIDs due to increased attention to anti-money laundering risks because of the historical performance of some players in the past decade.

So now, to become a payfac, you need not only a strong business reputation and relevant licenses, but also a product that requires you to be a payment facilitator to execute your business model.

3. Numbers

When you have the first two points in place, you should be ready to prove to the upcoming acquiring partner that there is intense market demand for your product and that you have sufficient capital to deliver the planned value.

4. Infrastructure

You’ll have to explain how you’ll handle your clients' onboarding and operations, including KYC and other risk management activities.

The infrastructure should give you the capacity to perform the following actions:

• Conduct and gather KYC checks,
• Approve data,
• Underwrite potential sub-accounts,
• Track ongoing payments,
• Calculate fees,
• Report and detect possible frauds,
• Offer access to your clients to manage and review all their business activity, etc.

Spell got you covered here. We can help your company introduce the payfac model, digitalising and automating all required processes, including onboarding, balance tracking & settlements, and providing businesses with the most advanced payment toolkit.

5. Partnership

When you’ve convinced your acquiring partner that your business is worth partnering with, and they’re ready to help you become a payfac, you'll be given a Payment Facilitator ID (PFID).

Congrats! Now you can start servicing, onboarding, and underwriting activities.

Innovate Your Business with a Payment Facilitator From Spell

Becoming a payment facilitator can be a lengthy, complex, and costly process, but not with Spell. We have developed a market-leading, cutting-edge platform for worldwide partners who want to optimize & scale their payments business in the most affordable and efficient way.

With Spell, your payfac can be up and running or upgraded in 1 week —sometimes as quickly as 1 day —to help you win in the hyper-competitive payments business.

Spell platform is built on a robust AWS infrastructure, with an outstanding 99.999% uptime, and is PCI DSS Level 1 compliant, as Visa confirms.

We offer various standard features, such as recurring payments, SDKs, and plugins, as well as billing, links for marketing campaigns, payment orchestration, digital onboarding, real-time account balances, and many other value-added tools to scale and optimise your payments business.

Take a Demo Tour to talk to Sales and accelerate your business with the best white label payment platform on the market!

Let’s get Spelling!
#spelltosell