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How the Payment Facilitator Model Is Designed to Protect Merchants
For years, small merchants were underserved by the payments system. In recent years, more and more types of providers have arisen to bridge this gap.
But not all options are created equal when it comes to protecting merchants and the payments system overall. And this can have important implications for the businesses served.
Do Payment Facilitators Have to Be PCI Compliant?
Data security is a critical component of the work that payment facilitators do. Proper management of sensitive data is an essential responsibility for anyone enabling access to the payments system. So every payment facilitator needs to understand the role that PCI compliance plays in their overall risk management efforts.
Read MorePFs and Financial Inclusion: How Payment Facilitators Help Drive Merchant Acceptance
All over the world, digital payments are experiencing a surge in growth. Much of the growth over the last few months is a result of pandemic concerns about handling cash and the need to obtain necessities during lockdowns. But those circumstances have only accelerated a trend that already existed.
Read MoreBeneficial Ownership: How Does It Affect Payment Facilitators’ Underwriting Process?
If payment facilitators were a fast food chain, the merchant experience might be their secret sauce – that special component that sets them apart from their competitors. The model is known for simplifying merchant applications and reducing unnecessary paperwork.
There is a balance, however, between reducing friction and protecting the payments system from bad actors.
Read MoreWhat is Interchange, and What Does it Mean to Payment Facilitators?
Increased revenue is often cited as one of the benefits of becoming a payment facilitator. And it’s true that the ability to charge merchants payment processing fees offers PFs a new revenue stream. But it’s important to note that the entire payment fee does not go directly into the PF’s pocket.
Read MoreExpert Perspective: How Can Payment Facilitators Mitigate Risk During COVID-19?
As businesses adjust to the changing times due to COVID-19, criminals and other bad actors are actively seeking ways to capitalize on the crisis. So, what can payment facilitators do to help protect themselves and their submerchants from fraud and other types of risk in this environment?
Read MoreWhat are Reserves, and How Do Payment Facilitators Use Them to Mitigate Risk?
Payment facilitators have a number of tools they can use to reduce their exposure to risk. To mitigate against credit risk, PFs will sometimes hold back funds from the submerchant – known as a reserve – to guard against possible future losses.
When are reserves typically used, and is now – as many businesses are experiencing financial hardship because of the coronavirus – a time to implement them?
Read MoreWhat is a Submerchant?
The relationship payment facilitators have with their merchants is at the heart of what PFs do. Working with a payment facilitator makes acceptance simpler for merchants – especially for smaller businesses, for whom setting up individual merchant accounts can often be too cumbersome.
Read MoreWhat is a Payment Gateway?
The payments industry is a complex system of pieces, all working together to make it possible for a consumer to purchase an item or a service simply by inserting a card at a retail location or entering their payment credentials into a web site.
The term “payment gateway,” is often mentioned as a necessary piece of the puzzle. But what exactly does that mean?
Read MoreWhat is a Money Transmitter?
Improving the merchant experience is a rallying cry for payment facilitators. Streamlining the underwriting and onboarding process is often a first step, but many PFs go further in search of solutions for the unique needs of their industries.
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