So You Want to be a Registered Payment Facilitator?

In 1967 The Byrds released the hit single “So You Want to Be a Rock ’n’ Roll Star,” a cynical take on the process of achieving overnight success in the music business. It seems The Byrds were already well-aware that being a rock star isn’t necessarily all it’s cracked up to be, and that the band members’ chances of achieving long-term critical and commercial success together were slim, despite their best intentions.  

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So You Want to be a Registered Payment Facilitator?

Jul 15, 2019

So You Want to be a Registered Payment Facilitator?

In 1967 The Byrds released the hit single “So You Want to Be a Rock ’n’ Roll Star,” a cynical take on the process of achieving overnight success in the music business. It seems The Byrds were already well-aware that being a rock star isn’t necessarily all it’s cracked up to be, and that the band members’ chances of achieving long-term critical and commercial success together were slim, despite their best intentions.

While it might seem a strange analogy, the chances of any individual business entity becoming a successful full-fledged payment facilitator are probably not unlike the odds of achieving a long, happy career in the music business. Just like becoming a rock star, the prospect of becoming a registered payment facilitator seems dreamy, until you come to understand the steps you need to take to enjoy those benefits, not to mention the risks and financial investment that comes with the territory. The good news is that there are now ways to realize most of the benefits of becoming a true-blue payment facilitator without the burden, risk, and expense. 

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If you’ve read this far you probably already have an understanding of what it means to be a payment facilitator and why you might want to become one, but if you’re seeking a quick review of the basics see “Why it Pays to be a Payment Facilitator,” in which we answer the questions: “What is a payment facilitator?” And “Is your business a candidate for becoming a payment facilitator?”

Generally speaking, the types of entities most likely to consider becoming a payment facilitator are POS providers who have a product or service and want to couple it with payments, then deliver it to their customer or end consumer in an elegant way. (Think: technology or software companies or ISOs in the payments industry.) The idea is to remove most of the friction that comes with getting customers set up to accept payments, while also providing a tightly integrated user experience within a larger product offering. The way to do this, of course, is to leverage a payment facilitation business model.

The challenge is that becoming a registered payment facilitator requires really heavy lifting, especially for a business that isn’t already operating in the payments industry. Without getting into all the dirty details, becoming a full-fledged payment facilitator requires registering with each of the four card brands and paying the associated fees on an annual basis. In addition, and you have to find a payment processor that will sponsor you as a payment facilitator. 

Then, once you become a registered payment facilitator you bear responsibility for all of the payments that are processed by your sub merchants under your payment facilitation, which requires additional investment and resources. For example, you have to establish and document an underwriting policy, you have to establish and adopt a risk management policy, and you have to hire people who can execute and manage all of the above. Finally, you have to build a technology stack on which to manage your business (or partner with a company that offers a facilitation platform).

The bottom line is that if you want to become a registered payment facilitator you’re talking about starting a new company, making an initial investment of tens if not hundreds of thousands of dollars, and hiring at least a handful of people with the requisite experience to manage applications, risk, and chargebacks on an ongoing basis.

An attractive alternative to becoming a registered Payment Facilitator

Alternatively, if you don’t want to make the investment and jump through the hoops necessary to become a registered payment facilitator, there is another option: partnering with TSYS®.  

TSYS company, ProPay® is already a registered payment facilitator; moreover we also offer a technology platform on which you can establish your own instance of payment facilitation. In other words, we can work together on a custom offering in which you can deliver a better user experience for your customers without the cost and risk involved in becoming a full-fledged payment facilitator. Better yet, you can also take advantage of our other enviable products and services, incorporating those into your offering. 

Last but not least, while leveraging our existing platform you can customize virtually all aspects of your customer’s user experience (including their experience with our application, customer service, reporting, etc.). Then, as your product or service offering grows, you can choose to take on more and more responsibility, and ultimately take on the burden of becoming a registered payment facilitator if your business becomes successful enough to warrant the investment. 

To learn more about TSYS’s payment facilitation offerings, give us a call at 1.888.845.9457. We understand the unique operating environment surrounding payment facilitations and can help you capitalize on growth opportunities.

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