Become a payment facilitator and improve the user experience. Focus on improving the user experience and payfac offering, and make money being a payfac. Evaluate different types of the payfac model.
When it comes to running a software company, there’s no questioning the importance of the user experience. If your software is unattractive, difficult to use, or inefficient, customers will know right off the bat. Many software companies struggle to retain customers over long periods of time, but that endeavor is only made more difficult when your user experience is not up to snuff.
For software that enables transactions between parties, becoming a payment facilitator is one major way that you can improve your customer experience. Without the payment facilitator model, parties that connect through your software would have to meet in person or use a third-party application to complete a transaction (Craig’s List and Facebook Marketplace are good examples of this). However, when your software becomes a payment facilitator, users can complete the transaction directly in your application, no third-party required.
Several major companies utilize the payment facilitator model, and that number is growing every day. Many mobile applications, including Uber and Postmates, are payment facilitators, as are companies like PayPal and Square. These companies boast fantastic user experience which is only made better by how easy it is to make payments with them.
In this article, we’ll discuss what a payment facilitator does, how it improves user experience, and how you can turn your software into a payment facilitator.
As we discussed above, a payment facilitator is a software that facilitates payments between one person or business and another. For example, when you order food on an app like DoorDash, the app facilitates payment between you and the restaurant (with a cut going to the driver and to DoorDash). There’s no need for you to visit the website of the restaurant to complete the payment. You just pay the app, and the app pays the store.
Traditionally, merchants were required to use their own merchant account to process payments. If you were accepting card payments, there was an account attached to your business which was underwritten -- a fancy way of saying backed by -- a bank.
Payment facilitators offer a slight tweak to that model. While the payment facilitator (a.k.a. your software) possesses a traditional merchant account, all sellers on your platform become “sub-merchants” of the master merchant account. Rather than being underwritten by a bank, individual sellers are backed by the software company.
This structure allows payment facilitators to easily manage transactions between outside parties and those on their platform. There’s no need for the software company to bill its sellers at the end of the month, they just take a portion of the transaction as it passes through the master merchant account on its way to the sub-merchant.
There are numerous ways that the payment facilitator model can help improve the user experience of your software product. Here are a few that are worth considering:
If you’re interested in turning your software into a payment facilitator, feel free to visit SwipeSum.com. SwipeSum has helped dozens of companies make this transition, and we’d be happy to do the same for you! You can contact us by emailing email@example.com or calling (314) 390-1461.