Payment Facilitation allows a platform to instantly board new users and enable payment acceptance on their behalf. PayPal was the first successful Payment Facilitator. The Payment Facilitation model drives revenue from the margin between platform payments costs and what they charge users.
PayPal, Stripe, and Square are the exceptions to the Payment Facilitation model in that they board a wide variety of merchant types. Today Payment Facilitation solutions center around specific verticals. An example would be FreshBooks. They allow their invoicing clients the ability to sign up for FreshBooks services and at the same time provide the ability to accept customer payments. This simple, instant sign-up is the primary reason platforms utilize Payment Facilitation.
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While this solution is a good fit for large organizations, smaller and mid-size platforms have been left behind due to the substantial costs and workload true Payment Facilitation demands. Significant upfront and ongoing costs, registration, and compliance demands exclude the vast majority of SaaS platforms that many benefit from instant onboarding and payments driven revenue.
Payment Facilitation has primarily only been an option for large, enterprise organizations.
Essentially the platform acts as a sub Payment Facilitator of a master Payment Facilitator. So an invoicing platform can leverage all the benefits of Payment Facilitation, namely instant onboarding and payments revenue generation, without significant costs and compliance demands associated with true Payment Facilitation.
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“95% or more of the platforms we speak with that are inquiring about Payment Facilitation are much better served by the new Payment Facilitation as a Service offering,” said Wayne Akey, President at Agile Payments. “The ability to quickly get to market without significant time or $ investment coupled with leveraging the master Payment Facilitators compliance infrastructure makes Payment Facilitation as a Service the ideal fit when instant onboarding is critical.”
Leveraging Payment Facilitation as a Service a platform could potentially integrate, test and go to market in a few weeks. The typical time frame to become a full-fledged Payment Facilitator is 6-18 months.
