Payment gateway selection is a tricky process. Especially, for PayFac payment platforms and SaaS companies. It makes you analyze all gateway features based on requirements, specific to payment facilitator and software service platform models. Moreover, payments for platforms and payments for ordinary merchants are not the same. By definition.
A quick reminder:
- Merchants just need to accept electronic payments from customers, who purchase products and services from them.
- SaaS platforms have to provide payment software solutions to their respective customers. It is, usually, these customers, that, in their turn, service the end users.
- A PayFac services a portfolio of sub-merchants under a unified master merchant account. It has to provide both merchant services and a payment solution.
That is why a standard gateway offering, a gateway for software platforms, and a PayFac payment gateway differ from each other. They have to support slightly different feature sets.
Let us review basic and advanced gateway features from the standpoint of SaaS and PayFac payment platforms.
Gateway Features, Specific to Saas and PayFac Payment Platforms
- Payment gateway integration. A merchant can simply partner with a large provider and get all the gateway features it needs within a standardized offering. At the same time, a SaaS or PayFac, usually, needs to dedicate much more considerable effort to integration and certification processes.
- Processing cost. More complex business models call for more complex transaction pricing models. Plus, in addition to monthly and per-transaction fees, it always makes sense to estimate indirect and opportunity costs.
- Settlement and reconciliation mechanisms. Who handles merchant funding (you or the gateway)? When are the merchants funded? Are any reserves withheld? What is the procedure for management of refunds?
- Supported currencies, geographies, payment methods, and types. Examples include crypto, e-wallets, ACH, gift cards, contact/contactless, card-present and CNP payments. The more diversified your customer base is, the more features the gateway should support.
- Reporting formats. Again, the more detailed and, at the same time, transparent transaction reports and merchant statements are, the better.
- Chargeback management. Does the gateway have chargeback disputing logic? What is the mechanism for chargeback handling?
- Fraud protection tools. These can range from P2PE, AVS, and 3Dsecure to geolocation to merchant monitoring and behavior pattern elicitation.
- Recurring billing and account updater. If you (or your sub-merchants) belong to subscription-based business category, then these features are critical.
- Merchant onboarding and underwriting. This one is, definitely, a must-have for a PayFac payment gateway.
- Multiple processor integrations. No processor can embrace all target MCC codes and payment types at once. That is why a robust payment gateway should be integrated with several processing platforms.
SaaS and PayFac payment platforms need to consider a whole set of critical features when choosing a payment gateway. True, PayFac model implementation is a promising strategy, especially for SaaS platforms. It provides additional revenues, makes the platform more competitive, brings in new customers, prevents churn, and improves payment experience. However, gateway selection process requires more careful analysis from a PayFac than from a SaaS company or an ordinary merchant.
Are you a SaaS company that wants to become a PayFac or looks for a payment gateway? Are you a white-label or full-fledged PayFac in search of a gateway partner? In either case it makes sense to address the experts for targeted advice on the subject. Armed with more than a decade of experience, they will help you succeed on your quest and avoid costly mistakes.