If you want to take your Independent Sales Organisation (ISO) to the next level within the payments landscape, then becoming a Payment Facilitator (PayFac) is the way to go – and the best part is, it couldn’t be easier.
There are several key strategies you can employ to improve your business model as an ISO, but when it comes to maximising growth, perhaps none are more impactful than developing your ISO into a PayFac.
What Is a PayFac?
Like ISOs, PayFacs are intermediaries who bridge the gap between merchants and Acquirers, making payments accessible for businesses who may lack the resources or expertise necessary to manage their own processing.
However, PayFacs are directly involved in payment processing. They hold a Payments Institution (PI) licence and manage additional responsibilities including safeguarding, risk management, and compliance. PayFacs also take on more risk than ISOs, as they’re liable for things like fraud and have increased regulatory obligations.
Why Become a PayFac?
If PayFacs have more liability, then why would an ISO want to become one? Well, unlike ISOs, PayFacs are directly embedded within the payment ecosystem and can therefore generate more revenue from transactions they process.
A PI licence enables PayFacs to handle client funds. Much like an Acquirer, this means PayFacs can place these funds into a payment account for a set period and generate interest on them before settling them in a merchant’s account. PayFacs can earn as much as 4% per annum on customer funds, making it a lucrative business model.
How to Become a PayFac?
To become a PayFac, you’ll need a PI licence issued by your local regulator; for example, the UK Financial Conduct Authority (FCA). Meeting the regulator’s requirements involves sending them a range of complex documents, including your Regulatory Business Plan, Compliance Procedures, Business-Wide Risk Assessments, and more.
Navigating that barrier to entry is easier than you might think, however. AuthoriPay provides comprehensive licence application support, guiding you through every stage of the process with confidence and minimising any potential delays. With AuthoriPay’s expert guidance, you could have your PI licence in as little as nine months.
PayFac Safeguarding
It’s not enough to just hold a PI licence. PayFacs are legally required to utilise appropriate safeguarding providers and comply with ongoing regulatory requirements. Licensed credit institutions and/or authorised custodians provide these safeguarding services and the accounts that earn interest on client funds.
AuthoriPay provides independent safeguarding audits to ensure compliance with current regulations and that your legal obligations are fulfilled. We’ve worked with clients of credit institutions around the world, including HSBC, ClearBank, and LHV, to ensure their safeguarding procedures are running smoothly.
How We Can Help
Becoming a Payment Facilitator is the best way to take your ISO’s growth to new heights. While securing a PI licence and fulfilling safeguarding requirements may sound daunting and time-consuming, they don’t have to be.
AuthoriPay specialises in providing both licence application and compliance support to ensure your transition from ISO to PayFac is as seamless as possible, allowing you to focus on what matters – delivering a top-class service for your clients whilst reaping the rewards!
Get in touch today to book a free consultation, and we’ll take care of the rest.
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