How Developers Can Offer a Seamless Merchant Experience
Developers can simplify payments for merchants on their own
When it comes to building credit card processing into your software, it hasn’t historically been an easy or affordable process and, often, it’s the merchant who suffers. Luckily, there are better options today.
Many ISVs turn to other payment companies to integrate payment processing into their software. Apart from the obvious challenges of time, cost, and complexity, the resulting solution often creates a disjointed merchant experience. After your team goes through the effort of selling a merchant on the benefits of your software and you complete the installation, your customer then has to work with a third-party payments company to apply for their merchant account. All that relationship building during the sale is put in jeopardy by a third-party processor who not only holds all the power but also benefits from the majority of revenue.
One way to streamline the merchant onboarding process is to work with a payment facilitator (Pay-Fac). In layman’s terms, a Pay-Fac is a type of payment company that has the authority to create sub-merchant accounts (i.e., each of your customers) without getting a third-party involved, thus eliminating the step of the merchant applying for an account. Pay-Facs can remove onboarding friction by taking some shortcuts that they’ve earned with how they’re built.
Many look at Stripe as the shining example of how easy payments can be. With a single integration, an ISV can add payment functionality and a merchant can get set up and begin accepting payments almost immediately. Stripe isn’t perfect though. One glaring downside is that the ISV doesn’t see much of the processing revenue and reporting isn’t very detailed.
Should you become your own Pay-Fac?
Rather than use Stripe, you could become your own Pay-Fac. Unfortunately, this isn’t an option most ISVs will be willing to pursue mainly due to the cost, required time and internal expertise required to build the technology needed to support a Pay-Fac model. Apart from the coders you’ll have working on this, there are many very specific guidelines to follow as well as state-specific rules.
You’ll essentially be building your own payment gateway to power functions such as settlements, boarding merchant accounts, billing, chargebacks, and more. You’ll also need an in-house underwriting team. Most ISVs don’t have this appetite for building and maintaining a new technology platform outside of their core business.
Pay-Fac made easy
The ideal solution would be to work with a provider that has a platform with Pay-Fac functionality already built in so you could gain all the benefits without all the work and required expertise. We identified this need and created Payment Facilitator enablement or ‘FACe’ technology, a ready-to-deploy Pay-Fac solution for ISVs looking to quickly reap the benefits of being a Pay-Fac without the expense of building the technology themselves.
NMI’s FACe technology allows ISVs to reduce overhead by removing the expense associated with creating their own Pay-Fac functionality. It also decreases go-to-market time, while enabling them to offer the payments piece as their own.
To get up and running with FACe, an ISV first needs to register as a Pay-Fac. Once that is in order, ISVs can use FACe to get their merchants can up and running in a matter of minutes and their account is ready for immediate use. Gone are the days of your merchants working with a third-party and having to suffer through the onboarding process.