How PayFac-as-a-Service Monetized Revenue

As an Independent Software Vendor (ISV), Software-as-a-Service provider, or just an online merchant, you know how important it is to have a functional payment model.

A payment facilitation plan is supposed to enhance the customer experience and increase your revenue in the long run. But becoming a payment facilitator (PayFac) is no easy task, considering the time and money required.

Enter Payment Facilitation-as-a-Service (PFaaS). By adopting this solution, you can offer payment facilitation to your customers without any hassles.

But did you know that PayFac-as-a-Service can be monetized? Whether you are trying to become a PFaaS provider or you’re looking to work with a PayFac, it’s important to understand how PFaaS can be monetized.

This article will explain 3 main ways, so read on to learn more.

1. Through shared revenue

This is the most straightforward way of monetizing revenue when offering PFaaS solutions. Using this method, a PayFac will work with its customers to establish a fee plan that makes it possible for both the PayFac and customers to make a profit.

This model is straightforward since the PayFac’s customers get a defined percentage share of 30% or more of the total revenue generated from payment facilitation as charged to the ISV’s customers. To calculate the total cost of facilitating payments, a PFaaS provider determines the interchange cost and then adds their costs and profits.

A majority of PayFac companies, like Tilled, use this model since it offers an easier onboarding process and provides a smooth customer experience.

2. Cost plus revenue method

This method is closely related to the shared revenue model. The only difference here is that the PayFac’s quotation will not be the final quotation that the ISV passes on to its customers.

When using this plan, the PayFac provider will not be sharing their revenue with the ISV or SaaS provider.

Here, the PayFac determines the real cost of facilitation and then adds a defined revenue amount to that to calculate the total cost. If, for example, the total cost to facilitate payments is 2.01%, the PayFac can add a defined revenue of 0.4%, to bring the total cost to 2.41%.

With the final value, the ISV can now forward a bumped-up cost to their customers. They can quote something like the standard 2.9% or more, to end up with a margin of 0.49%. That way, the PayFac will have made a revenue of .4% of the total payment facilitation cost, while the ISV or online merchant makes .49%.

3. Tiered pricing method

This method is only different from the two methods mentioned above in that the PayFac will have custom transaction rates. The transaction rates are typically divided into three tiers namely qualified, mid-qualified, and non-qualified.

The qualification will rely on certain features such as the payment method and the type of card. Considering that the type of tier will affect the total fees, the approximate cost to your business will vary similarly.

When it comes to creating revenue for your business, however, you will still use either of the two plans mentioned above.

Monetize revenue through PFaaS today

If you are an ISV or a SaaS provider who’s looking to increase their profit margin, payment facilitation as a service can do wonders for you flowerstips.

When you choose a reliable provider such as Tilled, you will enjoy the benefits of hassle-free payment facilitation while increasing the profitability of your business with ease. Thanks to the shared revenue plan from Tilled, you won’t have to worry about calculating a fee plan that will work for your customers.

So what are you waiting for? Leverage the power of Tilled and enjoy a seamless transaction process that will keep customers coming musicalnepal.

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