Digitize or Lose to Competitors: The 2022 Guide to Payment Facilitation
December 6, 2021
Payment Facilitators are the talk of the town in the payments industry.
It seems that every other business in the payments sphere is venturing into offering the capability to facilitate electronic payments for vendors. But what allows them to do this? How are the most successful payfacs staying at the forefront of the payments industry? And why is there hesitancy to follow suit?
In this guide you’ll learn why the most successful payment facilitators in the industry today are all digitizing to improve merchant onboarding, merchant underwriting, and to bring in more revenue, followed by how you can implement the same procedures to put your payfac on the forefront of the payments industry.
What is Payment Facilitation?
Starting with some solid definitions, payment facilitation is a service performed by a payment facilitator, more colloquially known as a PayFac. These businesses enable merchants and vendors to accept electronic payment methods, and this enablement is ‘payment facilitation’.
The processes of merchant underwriting and merchant onboarding are both essential elements of payment facilitation, and they can be arduous and riddled with risk if a payment facilitator does not have the proper processes in place, or isn’t utilizing technology to ease the burden of the merchant onboarding and merchant underwriting processes.
The Future of Payment Facilitation
Utilizing software to address current issues in the merchant onboarding and merchant underwriting processes is a huge way digitization (aka digital transformation) is changing payment facilitation, as well as the payments industry as a whole.
However, many payment processors are getting complacent with their outdated merchant underwriting and onboarding processes. These companies don’t realize that they are missing out on a significant amount of revenue by not leveraging the innovative technology on the market today.
Instead, they are under the impression that going with the flow of the innovation currently occurring in the payments industry is too complicated, just a fad, and economically not worth it. What they don’t know (and would learn by reading this blog) is that by hesitating on leveraging technology to improve payment facilitation, they are missing out on one of the biggest opportunities the payments industry has seen in the 21st century.
Without further adieu, let’s address the common misconceptions that contribute to hesitations with digitizing in the payments space.
Hesitations to Digitize — And Why They Are Misled
1. Too Complicated
Some software can have confusing interfaces, which leads many people to think that all software is difficult to use.
However, in many cases, software can and does actually simplify a business’s workflow. Straight-through processing works alongside onboarding automation software to automatically assign risk scores to categories of merchants in the merchant underwriting process. This saves underwriters working for PayFacs a lot of time, meaning they can process more merchants and drive up revenue for the company.
2. Just a fad
This is a particularly interesting hesitation because history has spoken to the prowess of technology when it comes to innovation and excellence.
Companies like Blockbuster certainly wish they could go back and change their minds about movie-watching platforms like Netflix and HBO being mere trends. To avoid a Blockbuster-like situation, PayFacs should change with the age of technology, not against it.
This means leveraging the technological solutions that are on the market right now, such as those that identify risk factors in the merchant underwriting process or check for NIGO compliance in documents to save time.
3. Hesitant to Embrace Change
Once a company has settled into resolute ways of doing things, they can forget how important innovation is to the perpetual success of a company. Procedures become ‘the way we’ve always done it’ or ‘status quo’, which can lead to a stagnation of the company in comparison to the forward momentum of its industry that results in eventual irrelevance.
To avoid this, PayFacs should be constantly reviewing and transforming their processes to ensure that what they’re doing is the best and most efficient way to do things. Today, that almost always means using some sort of technology.
Thus, looking into software to streamline outdated processes like merchant underwriting and merchant onboarding is a way to stay with the times and foray into the age of innovation.
4. Too Hard to Train Employees
Oftentimes companies think that you can’t teach an old dog new tricks. But what if the new trick was easier than the old one?
That’s the best way to describe implementing software to help with onboarding and underwriting processes. Many software companies take user experience into heavy consideration when developing their products so that the end result is intuitively easy to use, making the processes of both employees and clients seamless and enjoyable.
Furthermore, many of these tech companies have excellent customer service and onboarding processes themselves to make the process of adopting a new technology even smoother. For example, Agreement Express walks through our software with our customers, provides necessary information to train employees, and grants all of our clients access to a library of tools to ease the transition to using software.
5. Not Worth It
The amount of time saved and risk avoided by utilizing software in the underwriting and onboarding processes pays for the up-front cost of the software time and time again in the long run. A holistically developed, intuitive software solution makes merchant underwriting faster by checking for risk automatically and makes onboarding smoother, which reduces merchant abandonment.
In fact, adopting an onboarding process with Agreement Express can reduce merchant abandonment by 70%.
Both outcomes lead to more money saved because of software, and these are only two examples of the myriad of ways in which software can pay for itself with the benefits it gives PayFacs.
Take the First Step — Or The Next Step — Towards Embracing Technological Innovation
Connect with our team to learn more! Our software offers simple and intuitive page flows and friendly and communicative customer service, easing the difficulties of going back and forth between departments and the merchant during the onboarding process. We ensure no risk considerations get overlooked during the merchant underwriting process.
Look for a company like Agreement Express that not only offers excellent-quality software but also creates a lasting partnership to set your team up for success. A quality partner makes the tech transition an easy, streamlined process. As you weigh out the pros and cons of adopting an automated process, our team of experts is ready to walk beside you into the age of innovation. Reach out today!