How it works
People and technology to power payments
Our Stax Connect partner program combines the technology, processes, and people required to help maximize the revenue opportunities from embedded payments.
The Stax API and integration tools enhance the developer journey, ensuring seamless integration and operation, while our high-touch sales and marketing programs increase integrated payment adoption rates for new and existing customers.
PayFac as a service with payments-led growth
SaaS payment processing with Stax Connect combines the monetization power of payments with the control and security of your own infrastructure. Fuel your platform by enabling integrated payments and enhance your user experience.
PayFac as a service
A core part of any business is its revenue model, and SaaS companies are no exception. As companies move towards an increasingly digital world, the payments space continues to evolve.
What’s PayFac as a service?
Let’s start by quickly defining what traditional payment facilitation itself is. Basically, it’s a way to allow non-financial companies to accept payments. These companies generally provide other services (such as food delivery or HR management) to their customers but need a way for their clients to pay or get paid through their platform.
For example, if you provide a platform for physical therapists to schedule and treat clients, they’d probably also want to get paid via your platform. In other words, you’d need a company that would help facilitate the payments (the financial element) for your company (a non-financial platform or experience).
Traditionally, your company would have had to work with merchant acquirers, a bank that would host your company’s merchant account. However, the onboarding process and fee structure were notoriously client-unfriendly, costing significant time, money, and resources. Once your company has a merchant account, software, and hardware, you’d be able to start accepting payments on your platform.
More recently, PayFac as a Service has become a lucrative option for SaaS companies. Modern payment facilitators are non-bank institutions that provide payment facilitation via their platform, allowing companies to get onboarded into their environment. In significantly less time and with far fewer headaches, your customers (in this case, physical therapists) would be able to invoice clients and get paid, all through your platform.
Strictly speaking, your SaaS company would be “sub-PayFac” to a payment facilitator but can offer traditional payment processing services to your clients (or sub-merchants)—without any of the hassle of actually being a PayFac.
Ready to partner with Stax?
Talk with a payments-led growth expert about maximizing your revenue with embedded payments.
What do PayFacs Do?
A facilitator that offers PayFac as a Service jumps through all the hoops of becoming a registered payment facilitator, so you don’t have to and can simply reap the benefits and pass them down to your clients. For example, they have the payment infrastructure in place (like payment gateways or a PayFac-in-a-Box API) so you can actually accept payments, and they also have agreements in place with payment processors.
Equally important, a PayFac company will provide strict security standards for all sensitive information, including cardholder data. By ensuring PCI compliance, for example through Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, PayFacs can securely and safely validate your business.
But it doesn’t stop with what a PayFac as a Service provider has done prior to your signing a contract with them as a SaaS company. Once you’ve become their client and start accepting payments, they take over the onboarding and underwriting process for your customers, or sub-merchants. That means all the legal paperwork (such as termination clauses or fee structures) is handled by them, as well as thorough checks into potential customers and periodic assessments down the road.
Of course, PayFacs also do one more important task that’s in their name: facilitating payments. They’ll settle funds and pay out your customers, making sure all parties receive their fair share of compensation. In short, PayFac as a Service can help companies with frictionless onboarding and payment facilitation, all without the steep costs traditionally associated with becoming a PayFac.
Other names for PayFac as a service
PayFac as a Service is a more common term used today by PSPs. It can go by a lot of other names, such as a hybrid PayFac model. It’s called this because technically, modern PayFacs differ from traditional PayFacs like banks. That’s because non-financial companies are now able to provide payment processing services for their clients or sub-merchants directly via their platform and provide a fully on-brand experience.
While the SaaS company is not a payment facilitator in and of itself, it has access to many of the features that a traditional PayFac would have, but without the risks or costs associated with it. Whether it’s called PayFac in a Box, a managed PayFac model, or a hybrid PayFac, just know they’re all referring to the same thing.
Why you should work with PayFac companies
Throughout this piece, we’ve already touched on many of the benefits SaaS companies reap when they use PayFac as a Service, like reduced upfront costs and frictionless merchant onboarding. Not only are these benefits for your company, but a smooth customer experience offering frictionless integrated payments can help bring and retain more customers on your SaaS platform.
But that’s not all PayFac as a Service offers: with a trustworthy payment facilitation provider, you can start leveraging and monetizing payments. But what does that actually mean? Basically, by monetizing your payments, payment processing (which is often seen as additional costs due to fees paid to the provider) can actually become a revenue stream for your bottom line.
This means when payments go through your platform, you’ll be able to dip into the pot of the revenue share. By partnering with a PayFac that lets you tap into the processing fees they charge, it’s easy to grow your business, all while providing a seamless customer experience via embedded payments.
Ready to partner with Stax?
Talk with a payments-led growth expert about maximizing your revenue with embedded payments.
