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A model for streamlining merchant services

 

In the payment facilitator model, a software provider registers with an acquirer to provide payment services to sub-merchants that utilize their software. By registering as a payment facilitator with an acquirer, the software provider acts as a “master” merchant account provider, boarding sub-merchants under their own account in order to facilitate payment transactions for them. Payment facilitators eliminate the need for individual merchants to establish a traditional merchant account.

 

Payment Facilitators take on an active role in facilitating transactions by providing white-labeled payment processing services that can be integrated into a sub-merchant's overall solution, or as part of their own platform as a service.

 

But what exactly does it entail and is it right for you?

 

Software providers have many options when it comes to facilitating payments. While one avenue is to become a payment facilitator, that may not always the right path for your business. Worldpay is here to guide you in the right direction so we interviewed Jake West, Sr. Leader in PayFac® Business Development, to answer a few questions about what becoming a Payment Facilitator really means.

 

Read the Q&A now

As many in the payments industry know, Payment Facilitation is an exciting new model providing significant opportunities for progressive, growth-oriented companies.  Stated briefly, Payment Facilitators are merchant service providers that simplify the merchant account enrollment process. They operate on a sub-merchant platform where merchants don’t require their own Merchant IDs (MIDs), but are rather boarded directly under the Payment Facilitators' own master MID.

 

With “low-friction” boarding, and simplified qualification and management of sub-merchants, organizations can expand their channels and business more cost-efficiently, reach new markets faster, and deliver programs and new merchant value-propositions that would have been too cumbersome to implement with more traditional approaches.

 

As payment aggregators, companies like Square and Stripe are often regarded as the prototypical Payment Facilitators, but merchants often need more sophisticated capabilities.  With comprehensive offerings for Payment Facilitators, Worldpay allows organizations to operate like a Square or Stripe unto themselves, facilitating payments, aggregating sub-merchants, and funding their sub-merchants directly without the need for an intermediary adding complexity and eroding margins.

 

How Dynamic Payout Works

While there are many facets to Worldpay’s PayFac® offerings, Dynamic Payout is a powerful capability that simplifies the funding of both sub-merchants and the merchant / Payment Facilitator themselves. With Worldpay’s Dynamic Payout, Worldpay funds the Payment Facilitator and its sub-merchants directly. This allows the Payment Facilitator to operate without ever directly handling its sub-merchant’s money.

 

Sub-merchants of the Payment Facilitator will accept payments as they see fit, in the store, on the web or via mobile devices using one or more of Worldpay’s leading payment solutions. As payments are processed, card brand and eCheck payments settle to a Worldpay owned account.

 

With funds in the account, the Payment Facilitator then sends funding instructions to Worldpay via managed payout instructions entered via a web interface built for this purpose or a comprehensive Dynamic Payout API.  On receipt of funding instructions, Worldpay directly funds the sub-merchants as well as the Payment Facilitator. Worldpay generates daily operational and reconciliation reports, providing a closed-loop transaction life-cycle from payment to sub-merchant payout, avoiding the need for the Payment Facilitator to manage the funds themselves.

 

A Single Interface for Payments and Payouts

By employing a single interface for both Payments and Payouts, the Payment Facilitator enjoys several advantages:

  • They reduce their dependency on multiple vendors, and benefit from a single dashboard giving them full visibility to both payments received from end-customers, and payouts to their sub-merchants and themselves
  • They minimize cost associated with PCI compliance by reducing scope. With scope-reducing solutions from Worldpay, Payment Facilitators are never in possession of sensitive customer data
  • They improve operations with simplified, consolidated reconciliation
  • They side-step accounts receivable risks, and left-shift revenue streams by avoiding the need to invoice and collect from sub-merchants. Payment Facilitators are funded at the same time as the sub-merchants
  • They improve customer service to their channels, by avoiding delays in funding sub-merchants for products or services sold
  • Finally, by dealing with Worldpay, the Payment Facilitator enjoys faster time to market, reducing additional integration work that would be required with a bank acting as a payout provider.

 

A short video explaining how Dynamic Payout works is presented here and below.

 

If your business requires that you to manage and pay other merchants, Worldpay’s PayFac program and supporting technologies and services is worth a look. Contact us to speak to an integration consultant and learn more about Dynamic Payout and other capabilities for Payment Facilitators.

 

You can also visit Vantiv O.N.E., create an account to view our PayFac community, or join the conversation and learn how Dynamic Payout and other Payment Facilitator solutions from Worldpay can help simplify your business.

Most eCommerce companies see Apple Pay as a new method of payment - yet another hat in the alternative payments ring.

 

What these companies are missing, however, is that Apple Pay isn't a method of payment, and it is most certainly not reinventing the wheel when it comes to transaction processing. When combined with an iOS application that has a strong customer acquisition strategy and mobile-optimized design, Apple Pay is an authentication tool, and it is a conversion tool.

 

When you look at an alternative payments product like PayPal or Bitcoin, you see a technology offering that seeks to circumvent the existing payments ecosphere, and offer a retailer access to a new customer demographic that was unsatisfied with the incumbent payment vehicle (usually the four major card brand networks). Instead of introducing a new payment method to an arguably crowded market, Apple has set out to optimize how its users pay with existing methods of payment – in this case, American Express, Visa, and MasterCard.

 

Provided an issuer has implemented the proper risk controls, Apple Pay allows a cardholder and a bank to communicate to approve the device for future payments in a considerably lower risk process than ever before. Furthermore, Apple Pay can generate an issuer’s signature to accompany payment credentials shown to an iOS application, allowing the app to finalize a transaction knowing that it came from an issuer-approved device. In these ways, Apple Pay augments the security of transaction processing, but does so through existing pipelines.

 

Additionally, Apple Pay augments the way in which a consumer processes payment during in-app checkout. The more you can push payments to the background of your customer's experience, the more focus you can keep on the strength of your product. Once customers are in the checkout process of your website or mobile application, the last thing you want them thinking about is whether they are inputting the right billing address or if they mis-typed their 16-digit credit card number. Using the iPhone’s TouchID biometric scanner, Apple Pay can simultaneously confirm the cardholder’s identity as initiating a transaction, as well as provide all necessary cardholder data – email, shipping address, payment credentials – directly to the iOS application to process payment. According to Adobe Digital Index, digital wallets have shown to increase cart completion rates by 10% - when all it takes is a thumbprint to place an order on a mobile device, it is easy to imagine this effect on conversion.

 

So there you have it – as you consider Apple Pay as an addition to your mobile strategy, stop thinking about it as a new method of payment, and more as a tool to augment your existing methods. Reducing risk and increasing conversion are goals that most companies can agree on – why not let Apple Pay focus on them for you? Tune in for the next installment of our Digital Wallets blog series, when I’ll focus on products like Android Pay and CurrentC; where they sit in the payments value chain, and the differences between them.