As explained in developing applications for PayFacs, there are a number of business and technical requirements that make payment facilitation different. These include more stringent PCI requirements and increased complexity around underwriting and risk. Companies operating as PayFacs also need to provide sub-merchants with self-service access to statements of their sales, as well as timely funding for their activities.
From a developer perspective, the transactional aspects of processing payments are largely the same as with any other payment integration. Developers will probably want to consider Vantiv’s eCommerce platform to support payment transactions in their application.
PayFac integrations can be involved, and developers are urged to consult with a Vantiv solution consultant before they get started with their integration.
Developers may need to use additional APIs to facilitate onboarding, managing and funding sub-merchants. While small PayFacs may be able to manually enter and manage information about their sub-merchants using the Vantiv PayFac Portal, as the number of sub-merchants becomes large, developers will want to use the PayFac API to onboard and manage sub-merchants.
1. The PayFac API
The PayFac API is an XML based, RESTful API that is associated with Vantiv’s eCommerce platform. The API can be used by developers to create and update legal entitles and sub-merchants as well as retrieve information about legal entities and sub-merchants in near real time. It can also be used to delete sub-merchants should the need arise.
You can learn more about Vantiv’s PayFac API and review code examples here.
Vantiv One members can obtain more information about the Vantiv PayFac API in the following documents:
2. Funding sub-merchants
Paying sub-merchants is a second major area of functionality that will have impact on how the developer builds the payment application. Vantiv supports two distinct payout solutions to address these challenges:
- Dynamic Payout: Controls the distribution of funds using flexible, customized instructions defined by the PayFac.
- Managed Payout: Automatically directs the distribution of funds using pre-configured instructions.
Our payout solutions provide a closed loop transaction lifecycle from payment to payout. Managed Payout is a self-contained service whereas Dynamic Payout is a solution platform.
In a Managed Payout scenario, fee profiles are established using the Vantiv PayFac portal to allow a PayFac to create their own fee structures for approved or declined Authorization, Capture or Refund instructions by card type or for eChecks. PayFacs have the flexibility to levy flat rate charges, percentage-based charges or a combination of the two.
In the case of a Dynamic Payout scenario, PayFacs will board sub-merchants and submit transactions normally. Funds from settled transactions accumulate in an FBO account (“for the benefit of”).
In this case, the PayFac takes the responsibility of distributing funds to sub-merchants (and to themselves) by submitting a batch file containing funds transfer instructions. The developer has a major role in this payment scenario, since they will need to generate the LitleXML formatted funding instructions based transaction histories and the payout agreements that the PayFac has with sub-merchants (daily, weekly, monthly etc.)
The Dynamic Payout functionality relies on LitleXML batch functionality on Vantiv’s eCommerce platform.
Additional LitleXML instructions documented in the Litle XML Reference Guide facilitate these payout instructions. As examples:
<payFacCredit> - used for a PayFac to fund themselves from the settlement account
<payFacDebit> - used for a PayFac to return funds if necessary to the settlement account
<submerchantCredit> - used to provide funding to a sub-merchant
<submerchantDebit> - used to debit a sub-merchant account
Additional details about how developers can use PayFac Dynamic Payout facilities are available to Vantiv O.N.E. members in Appendix D to the LitleXML reference guide.
Learn about how you can get started working with Vantiv to build or integrate your payment facilitation solution.
Learn about PCI requirements for PayFac applications.