INTRODUCTION
To thrive in today’s competitive Independent Software Vendor (ISV) market, providers must carefully consider their payment strategy. To stay ahead, they need the capability to whitelabel their payment processing module and offer instant merchant account approvals to their clients. A seamless payments onboarding experience, often referred to as payfac, is essential for achieving this.
Because of the combination of potential hyper-growth and instant onboarding of merchants with very little up-front effort, ISVs acting as payment facilitators are becoming more prevalent than ever. When a software provider acts as a payment facilitator, they serve as the intermediary between their merchant customers and payment processor, thereby improving onboarding efficiency and maintaining control over the payments process.
However, there are risks, costs, and heavy lifting that come with being a payfac. An easier way to reap the benefits of payment facilitation without the hassle is through a managed payment facilitation program. This guide will help you understand how ISVs can operate as payment facilitators without the hefty workload through a managed payment facilitation program.
WHAT IS A MANAGED PAYFAC?
Managed payment facilitation allows software providers to deliver an instantaneous, frictionless boarding experience without the requirement to take on the risk, liability, cost, and effort associated with traditional payment facilitation models. Leveraging advanced algorithms, a normally time consuming merchant onboarding process such as risk, assessment, customer finance evaluation, and business monitoring happens automatically.
Whether establishing a merchant account for the first time or switching providers, with a managed payment facilitation program, merchants can be up-and transacting within minutes rather than days.
With minimal integration work and no requirements for upfront capital, in-house payments expertise, bank sponsorship, Visa and Mastercard registration, or assumed risk and liability all associated with traditional payment facilitation—managed payment facilitation is ideal for software providers looking to offer a whitelabeled payment solution and seamless onboarding experience, to begin earning payment residuals faster. REDUCE MERCHANT ONBOARDING TIME FROM 1.5 BUSINESS DAYS TO LESS THAN 10 MINUTES.
HOW DOES MANAGED PAYFAC COMPARE TO PAYFAC?
The payfac model has reshaped the payments ecosystem for software providers. With autoapprovals and instant onboarding of merchants, being a payfac puts control squarely in the hands of the software provider and makes the customer experience more seamless. But the traditional payfac model is not for everyone as program limitations exist and the costs are high, making the path to ROI long.
Here are the key differences between the two programs.
Managed Payment Facilitator
. No card brand registration or associated fees.
. 0% risk and liability for merchant portfolio.
. Simple API allowing you to provide your customers with a branded, instant onboarding experience as well as white-labeled statements.
. Full operational support from the payments partner provided to manage payments including risk and underwriting.
. Revenue share resembles that of a referral partnership, but with instant onboarding and auto approvals, Integrated Software Vendors (“ISVs”) begin earning residuals immediately.
. A team of payment experts to support and guide your organization through the entire development process.
. A dedicated partner management team who oversees all strategic and operational aspects of the partnership.
. Direct access to marketing services with both turn-key and custom campaigns to drive customer adoption.
. Short path to ROI.
Payment Facilitator
. Required to pay registration and annual renewal fees of $5,000 each to Visa and Mastercard.
. 100% risk and liability for merchant portfolio.
. More complex API since in addition to instant onboarding and white-labeled statements, payfacs own settlement and funding disbursement.
. Copious staff resources are needed to provide customer support, risk, underwriting, IT, etc.
. Possible higher revenue share since most of the operational and structural responsibility lies with the payfac.
. Minimal development support provided.
. Limited guidance and collaboration.
. Marketing resources are not available.
. Long path to ROI, if any.
BENEFITS FOR INDEPENDENT SOFTWARE VENDORS
MONETIZED PAYMENTS
Maximize earning potential with frictionless boarding and instant auto-approvals where merchants begin processing in near real-time and you begin earning residuals immediately.
OPTIMAL CUSTOMER EXPERIENCE
Create an exceptional customer experience and streamline merchant onboarding by using an API to securely provide customer information. Boarding requirements are reduced to minimal data points and acceptance of terms and conditions. ISVs are in complete control of the customer onboarding experience.
BUILD YOUR BRAND
Build loyalty and strengthen your brand with advanced white labeling branding options which include welcome emails, merchant statements, and reporting portals.
CONTROL & FLEXIBILITY
With a managed payment facilitation program, ISVs can take on as much or as little processing responsibility as they want.
BENEFITS FOR MERCHANTS
SIMPLE
With a truly straightforward (frictionless) setup where only a few pieces of information are required, no merchant application needed, and easy-tounderstand pricing models, simplicity is the name of the game.
STREAMLINED
Access to the modern payment solutions that organizations need to create exceptional customer experiences, (including tech to streamline operations and simplify compliance), omni-channel payment solutions for payment acceptance at any time, from anywhere, and the ability to capture every payment through your software application.
FAST
Removing friction from the merchant onboarding process means processing can begin in near-real time. Clients get the full value from the ISV’s application when integrated payment processing is available immediately.
HOW TO GET STARTED
If you are looking for a payment facilitator program that offers the benefits of frictionless boarding without the risk and liability, Nuvei is here to deliver innovative payment solutions that empower our partners to drive exceptional commerce experiences.
Nuvei’s managed payment facilitator program offers the benefits of near real- time frictionless boarding (automated onboarding) without the risk and liability associated with traditional facilitator programs. Additionally, there are no requirements for upfront capital, inhouse payments expertise, bank sponsorship, Visa and MasterCard registration, or assumed risk and liability, as Nuvei takes on the heavy lift, risk, and liability.
If you’re ready to take your application to the next level, look no further than Nuvei. Let us show you how easy and profitable it can be to deliver a white-labeled, comprehensive payment solution that enhances customer experiences and produces superior outcomes.
With Nuvei’s managed payment facilitation model, the average number of days for batch processing by merchants has decreased by 88%, from 24 days to just three days, allowing ISVs under this model to earn residuals faster than ever before.