Payment processing has come a long way from the days of stand-alone payment terminals. Embedded and digital payments are becoming the new normal.
In fact, McKinsey has found that 50% of small businesses now run payment processing through their CRM, EHR or business managemnt software platforms, and 15% are in the process of transitioning their payment processing to their software provider.
As payment methods and types have become more diversified, so too have merchant options when it comes to the application, boarding and go-live experience.
In traditional acquiring, merchant application processing, approval and account onboarding can take up to two weeks.
But the increased digitization of payments is creating a demand to speed up the merchant application and onboarding process so that companies can begin accepting payments faster.
Payfac offers a more streamlined and efficient approach compared to traditional payment processing, primarily by simplifying the merchant onboarding process and providing a more integrated solution.
We break down some of the key differences between traditional payment processing and payfac in merchant applications and onboarding.
The Application Process with Traditional Processing
1. Application Process:
- Detailed Application: Merchants need to fill out a comprehensive application form, providing extensive business and financial information.
- Underwriting: The application undergoes a thorough underwriting process, which can include credit checks, background checks and a detailed risk assessment.
- Documentation: Merchants often need to submit various documents, such as business licenses, financial statements and bank statements.
2. Onboarding Time:
- Longer Timeframe: The underwriting and approval process can take several days to weeks due to the thorough examination of a merchant’s credentials and risk profile.
3. Merchant Account:
- Dedicated Merchant Account: Upon approval, the merchant receives a dedicated merchant account with their own unique Merchant Identification Number (MID).
The Application Process with Payfac
1. Application Process:
- Simplified Application: Merchants fill out a shorter application form with minimal documentation requirements.
- Instant Underwriting: Many payfacs utilize automated underwriting systems that can assess risk and approve applications quickly.
- Less Documentation: Payfacs require fewer documents, such as basic business information and merchant identification.
2. Onboarding Time:
- Quick Onboarding: The entire onboarding process can be completed in minutes to hours, thanks to the streamlined application and automated underwriting.
3. Merchant Account:
- Sub-Merchant Account: Merchants do not get their own dedicated merchant account. Instead, they become sub-merchants under the payfac’s master merchant account, receiving a sub-Merchant Identification Number (sub-MID).
Key Advantages of Payfac in Applications and Onboarding
- Speed: The primary advantage is the significantly faster onboarding process, allowing merchants to start accepting payments almost immediately.
- Simplicity: Reduced paperwork and fewer documentation requirements make the process easier and more accessible, especially for smaller businesses or startups.
- Scalability: Payfacs can quickly scale and onboard multiple sub-merchants, making them ideal for platforms and marketplaces that need to facilitate payments for many users.
Payfac also offers enhanced control and customization over traditional payment processing, providing businesses with tailored services that better fit their specific needs. This results in improved customer experiences, faster transaction times and reduced administrative burdens – making payfac a superior choice for businesses seeking efficient and flexible payment solutions.
The Payfactory Difference
For companies looking to harness the full potential of embedded payments, Payfactory offers a comprehensive payment facilitation platform designed to streamline payment integration and maximize revenue. With a focus on security, flexibility and user experience, we enable software platforms to effortlessly embed payment functionalities and tap into lucrative revenue opportunities.
Learn more about our seamless merchant application and onboarding process in our video, Payfactory’s Merchant and Partner Portal.