How Can Becoming a Payments Facilitator Increase Revenue for My Software Company?

Learn how to monetize merchant services with the payment facilitator model. If payment processing is part of your SaaS platform you can make money from payments. Integrating the payfac model might be the way to earn more revenue.

Your software can meet any number of needs for your consumers -- maybe it expedites a tedious process, analyzes complicated data, or connects people together. However, there’s only one need that consumers meet for your business: they provide you with revenue.

In this article, we want to discuss how to increase the revenue you receive from your customers using a model called payment facilitation. Basically, this model gives your business power over how cards are accepted through your software and allows you to take a portion of every transaction as an additional revenue stream.

Let’s learn how.

Revenue in a SaaS Business

You already know that no software company can thrive without revenue. No matter how many users or investors you might have, you can’t grow without bringing in revenue.

Over the last two decades, savvy executives have developed software-as-a-service (SaaS) models geared towards creating steady, measurable revenue. Take Spotify as an example. Before Spotify came around, music lovers purchased songs one-by-one from online music stores. When Spotify introduced unlimited music for just $10 a month, consumers couldn’t pass it up. Spotify didn’t have to worry about how many songs its users purchased -- the revenue was guaranteed. As long as they could acquire customers, they were golden.

Your software business probably operates on a similar model. Whether you’re paid monthly, quarterly, or yearly, you can easily project how much revenue you’ll have in a given month.

What most software businesses don’t realize is that there are ways to expand the revenue received from customers that don’t require you to increase your prices. One of these methods is called payment facilitation.

What is Payment Facilitation?

A payment facilitator is any software that facilitates payments between one person or business and another. Not every software will fall under this umbrella, but if your business connects two parties to one another, you can likely take advantage of the payment facilitator model.

As an example, let’s look at Uber. When you need a ride somewhere, you use Uber’s application to find a nearby driver, call him to your location, and pay him at the conclusion of the ride. Because Uber facilitates the payment in this scenario, it is considered a payment facilitator.

What Does Payment Facilitation Look Like?

Payment facilitators have a unique structure compared to most other businesses. When a software company becomes a facilitator, they create a master merchant account with a provider. All transactions on the platform flow through this master merchant account.

Individual sellers on the software are given sub-merchant accounts. When a customer makes a payment, the cash goes from the customer to the master merchant and on to the designated sub-merchant. Before passing the funds to their sub-merchant, facilitators take their processing fees for the transaction. Some of these fees will be paid back to the facilitator’s provider to cover interchange fees, but the rest becomes additional revenue.

Because facilitators oversee all transactions on their platform, they are free to set their own processing fees. Most choose to keep their rates in-line with what third-party providers offer -- typically between 2.75% and 3% -- but the choice is yours.

How Does Payment Facilitation Bring in Revenue?

Most software companies accept payments through third-party providers. Rather than handling payments directly in their software, clients are sent to companies like Stripe, Square, or PayPal to complete their payment. While these companies are all great at what they do, they’re taking a big chunk of revenue that could be going into your pocket instead.

Imagine your software is running transactions through PayPal. Transactions at PayPal cost 2.9% of the transaction total plus $0.30. So if a user is sending $100 to a seller through your software, $3.20 of that will go to PayPal. Depending on your model, you’ll probably see a small cut of that transaction as well. Assuming a 2% cut, your revenue for this transaction would be $2.00.

There’s an issue here, though. The wholesale cost of a transaction hovers between 0.5% and 2.7%, depending on the type of card used and other factors. That means PayPal is making as much as $2.70 on that transaction. Payment facilitation gives you access to that revenue.

If you remove PayPal from the equation and process the payments in house, you’ll not only receive your $2.00 cut but that $2.70 in processing revenue as well. That’s a huge increase!

How Do I Turn My Software into a Payment Facilitator?

Not all payment processors support payment facilitators, so finding the right provider is key. Any provider that offers the service is going to be fairly similar, so pricing is going to be the ultimate decider in most cases. Remember, transactions have a base cost (called interchange) that will be the same across all providers. You negotiate the rates above interchange. Of course, you’ll want to keep these as low as possible to maximize the revenue that comes from payments.

Finding and reviewing all of the payment facilitator options out there can be a really time-consuming process. That’s where SwipeSum comes in. We have partnerships with several payment facilitation providers, giving us access to low rates you won’t find elsewhere (even if you approach the providers directly).

We’ll help you every step of the way, from finding your provider to setting rates, and even into integrating the system into your software. This service is completely free. That’s right, we’ll do all the legwork for free. Once you’re set-up, we’re happy to stay on as an outsourced Chief Payments Officer, which means we can handle security measures and deal with disputes on your behalf.

To get started, visit us at or email Zack Hechtman, Director of Payment Facilitation Solutions at

Zack Hechtman

Zack Hechtman

Zach Hechtman is the former Director of Payment Facilitation Solutions at Swipesum. A rising senior at Washington University in St. Louis, Zach is studying Entrepreneurship and Healthcare Management.

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