Why PayFac-as-a-Service is the Best SaaS Payment Monetization Solution

Revenue growth is a constant need for every SaaS platform. Whether an early-stage SaaS or a mature one, the highly competitive market forces you always to pursue growth. Meeting your growth targets efficiently is challenging. After all, you can introduce only so many platform features before experiencing diminishing returns.

 

 

Payment monetization is a process many SaaS platforms have explored. You have several options in this regard, but payment facilitation-as-a-service or PayFac-as-a-Service is probably your best choice.

Here’s why!

Deliver seamless CX with payment facilitation-as-a-service

The average SaaS integrates payments into its workflow by partnering with a payment processor like Stripe and referring traffic to it. There are quite a few advantages to this approach. 

You can offer instant payment acceptance to your merchants and outsource onboarding, software, and compliance to a trusted service provider. However, this convenience comes at a cost. For starters, you’re offering your merchants (and the consumer) disjointed CX. Most payment processors do not integrate fully with SaaS platforms. 

They claim to offer integrated payment facilitation solutions, but function as an awkward bolt-on feature to your platform. Aside from inconsistent CX, you also lack control or insight into payment workflows.

Here’s a scenario every dropshipping SaaS platform faces: Stripe withholds your merchants’ funds due to “suspicious activity.” 

The merchant contacts you since you’re the payment facilitator in their eyes. However, you have no control over their CX or payouts. The result is frustration and a lack of visibility into the issues that plague your customers. 

If you’re dealing with high-risk merchants, which includes e-commerce retail according to the card brands, the likes of Stripe can decrease revenues significantly.

PayFac-as-a-Service providers, such as GETTRX, offer an instant plug-and-play solution while giving you control over CX. You can customize your payment portals according to your branding and rely on the payment facilitator to handle compliance, fraud monitoring, and payment workflows.

The result is a truly integrated payment experience. 

More cash flow compared to payment processor relationships

Payment processor partnerships might give you instant cash flow, but what if you had a better option? PayFac-as-a-Service can deliver higher cash flow while putting more control in your hands. 

Let’s look at how this is possible via an example.

A SaaS dropshipping platform, call it Platform A, has the following:

• Merchants – 1,000
• Average transaction size (assumed) – $100
• Merchant average processing volume – $10,000 per month. 
• Monthly processing volumes – (#3 * #1) = $10M 
• Annual processing volumes – (#4 * 12) = $120M
• Number of transactions – (#5 / #2) = 1.2M

Stripe charges 2.9 per cent of transaction volumes and 30 cents per transaction. Stripe’s annual payouts equal:

(2.9% of $120M + 3 cents * 1.2M transactions) = $3.84M

While Stripe pockets close to $4M annually, it doesn’t offer bonuses or referral fees to you. To monetize payments, you need to levy an additional charge above their fees.

Let’s assume your merchants accept these charges, and you levy one cent per transaction and 0.1% on volumes. This gives you:

(0.1% of $120M + 1 cent * 1.2M transactions) = $132,000 annually

Here’s how a PayFac-as-a-Service solution will boost your revenues:

• You charge – 2.9 percent and 30 cents (no markup needed)
• You pay the payment facilitator – 2.3 percent and 10 cents (interchange plus pricing plan)
• Your margin – 0.6 percent and 20 cents
• Your revenues – (0.6 percent of $120M + 2 cents * 1.2M) = $960,000 annually

The bottom line is this: You’ll earn an additional $840,000 annually (700 percent more). Best of all, as your platform grows, your revenues from payments increase.

No high-risk merchant disruptions with PayFac-as-a-Service

While SaaS platforms generally face challenges with payment monetization, those serving high-risk merchants have a different set of issues with which to deal. High-risk merchants face uncertainty with payment processors due to arbitrary decisions that make no sense. For instance, Shopify recently removed authorize.net from its list of approved payment gateways, jeopardizing new drop shippers for a few days until it was added back again, given all the complaints they received.

PayFac-as-a-Service providers are typically well-versed in high-risk sectors and do not disrupt these businesses. High growth and success are not penalized due to a lack of payment facilitation sophistication. 

Moreover, these payment facilitators employ market-leading tools to monitor common fraud methods such as chargebacks and friendly fraud. The result is a safe and fulfilling experience for your merchants and great CX.

Offering the prospect of no arbitrary payment freezes or payout stoppages will attract several dropshipping merchants to your platform by themselves. Add seamless white-labelling and the benefits we’ve already listed, and payment facilitation-as-a-service becomes an easy choice.

PayFac-as-a-Service is cost-effective

Becoming your own payment facilitator presents several risks. You’ll have to spend considerable time and resources to ensure your payment infrastructure gives you positive ROI. Unfortunately, the ROI is usually negative for most SaaS platforms.

Partnering with a payment facilitator will give you a cost-effective way of scaling your payment infrastructure. More importantly, you’ll always remain compliant with payment industry laws and regulations. Violating these regulations attracts hefty fines, something an experienced payment facilitator will avoid.

You can also focus on developing your core product and capabilities, leaving payment infrastructure engineering and development to an expert. The result is more time for your development teams to enhance your product and safety for your merchants.

Control merchant onboarding minutely

As a SaaS platform, you can choose from several payment facilitation providers in the market. Unfortunately, most of these providers offer “PayFac-in-a-box” services. These platforms work much like a payment processor, adding an appendage to your platform and disrupting CX.

Another major issue is a lack of merchant onboarding control. You’ll have to outsource onboarding to the platform and trust they know what they’re doing. You cannot customize credit terms for your most valuable merchants or model different transaction limits.

As a result, you’re dependent on your PayFac completely, removing all the reasons you chose them in the first place. 

The good news is that SaaS platforms can opt for a better version of PayFac-as-a-Service instead of the boxed options. You can control your payment workflows better and monetize payments easily.

How GETTRX’s payment facilitation-as-a-service can help?

Choosing the right payment facilitation partner is critical to growing your SaaS platform. GETTRX’s 30 years in the payments industry make us your ideal partner. 

Here are some of the benefits our SaaS partners receive:

• We own our technology – We fully own our technology stack. We do not outsource or white-label our infrastructure.
• Revenue stream guidance – Payments are not your core expertise. We’ll help you design a pricing structure that delivers value to your merchants and boosts your cash flow.
• Fraud monitoring and compliance – We serve high-risk industries and have deep experience in monitoring various forms of fraud that occur in them. Offer your merchants world-class fraud protection at all times.
• White-label – Customize our platform with your branding easily to offer memorable CX to your merchants and their customers. Own the payment experience and enhance your product.

Payments are a critical part of every business; unfortunately, high-risk merchants face several hurdles. By helping your merchants overcome these challenges via a payment facilitation-as-a-service provider, you can boost revenues, trust, and awareness in the market. The result is sustainable growth that helps you hit your growth targets easily.

 

 

Curious about how GETTRX’s PayFac-as-a-Service can boost your SaaS platform’s revenues? Get in touch with us!