As an ISV CTO, you are constantly looking for ways to streamline payment processing and generate revenue for your company. With the rise of the PayFac model, you may have considered becoming a Payment Facilitator yourself or using a “PayFac-in-a-Box” solution. While the idea of owning your payment processing and earning a percentage of the fees charged to your customers may seem enticing, there are several drawbacks to consider before taking this step.
Firstly, the cost of setting up and maintaining a PayFac-in-a-Box solution can be significant. You will need to invest in software development, compliance, and security measures, which can quickly add up. Additionally, ongoing maintenance and support costs can be substantial, and it may take years to recoup the initial investment.
Secondly, becoming a PayFac also requires a significant staffing investment. You will need to hire and train personnel to manage the payment processing system, including compliance officers, risk management specialists, and technical support staff. This can be a considerable expense, both in terms of salaries and benefits and the time required to recruit and train qualified personnel.
Thirdly, becoming a PayFac also entails taking on significant financial risk. As a Payment Facilitator, you will be responsible for all chargebacks and refunds, which can quickly add up and eat into your profits. Additionally, managing compliance with industry regulations and staying up to date with changing rules can be a significant challenge, which requires expertise and resources.
Given these challenges, many ISVs are turning to PayFac-as-a-Service providers as a more cost-effective and efficient solution. By partnering with a PayFac-as-a-Service provider, ISVs can benefit from the advantages of the PayFac model without the upfront costs, staffing, and risk associated with becoming a Payment Facilitator.
A PayFac-as-a-Service provider can offer the same convenience, control, and revenue sharing benefits as a PayFac-in-a-Box solution, without requiring the same level of investment. Instead of building and maintaining your own payment processing infrastructure, you can leverage a provider’s existing system, which has already been vetted for compliance and security.
Furthermore, a PayFac-as-a-Service provider offers additional benefits, such as access to multiple payment processors and currencies, better negotiating power for transaction fees, and ongoing support and maintenance. By partnering with a PayFac-as-a-Service provider, ISVs can focus on their core business activities, while leaving payment processing to the experts.
In conclusion, while the idea of owning your payment processing as a PayFac may seem attractive, the costs, staffing requirements, and risks involved can be significant. Instead, many ISVs are turning to PayFac-as-a-Service providers to reap the benefits of the PayFac model without the burden of investment and management. By partnering with a PayFac-as-a-Service provider, you can focus on your core business activities and generate revenue through a seamless payment processing experience for your customers.