In a world of increasing digitalization, smaller banks and credit unions struggle to compete with the merchant solutions offered by big banks. Small banks can use several digital strategies to transform their merchant banking abilities.
For instance, small banks can offer merchants value by digitalizing onboarding processes, foolproof transaction monitoring, and white-labelled payment acceptance solutions. However, resource constraints, underqualified personnel, and cost overruns tied to integrating these solutions can make digital banking transformation painful.
A quality payment facilitation-as-a-service partner removes many of the hurdles smaller banks face when transforming their payment processes. Here’s how.
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Fast and compliant client onboarding
Ensuring and enforcing merchant KYC is challenging for small banks and credit unions. According to McKinsey and Company, half of all banks have no tech solutions for many essential onboarding processes. As a result, manual KYC and AML processes increase onboarding times significantly, diminishing customer experience…
Onboarding plays a critical part in SMB clients’ overall banking experience. By working with a quality payment facilitator to transform your onboarding processes, you can differentiate your banking platform from its peers.
Besides simplifying client onboarding and preventing unexpected compliance issues, the right PayFac-as-a-Service provider can offer additional benefits like:
- Automating your onboarding processes – The right PayFac-as-a-Service provider will use its experience and insight to provide straightforward, automated onboarding. By taking your KYC and AML screening digital, you can significantly speed up the process.
- Offering solid technological infrastructure – A good PayFac-as-a-Service provider will fully own their tech stack, allowing you to customize their service to suit your clients’ needs.
- Enhance client experience – By using technology to speed up typically mundane onboarding processes, you can provide more personalized attention to your clients and improve CX.
Example of Payfac-as-a-Service improving onboarding
During onboarding, your PayFac-as-a-Service partner can flag areas of concern in your client’s application. Highlighting potential compliance issues ensures relationship managers know what to focus on clarifying during onboarding.
Should there be no concerns flagged by your PayFac-as-a-Service provider’s tech, you can quickly onboard clients while keeping the process completely digital.
Automated transaction monitoring
Effective transaction monitoring can pose a challenge to small banks. Banks must install complex infrastructure, hire the right maintenance personnel, and build their expertise in a non-core business area. A quality PayFac-as-a-Service provider can remove these obstacles.
Calling on a wealth of experience within the industry, a PayFac-as-a-Service provider can use the right algorithms and infrastructure to:
- Compare transactions to known industry payment trends
- Flag areas of concern within existing transactions
- Eliminate the need for manual processes in your transaction monitoring team that distracts from your bank’s core focus
- Offer in-depth insight into transaction trends via a specialized reporting dashboard
Example of automated monitoring with PayFac-as-a-Service software
Underdeveloped payment processors and gateways often block transactions outright in an attempt to maintain compliance. This can lead to significant delays and a poor overall merchant experience.
The right PayFac-as-a-Service platform will monitor your clients’ historical transaction records and compare them to current trends. Instead of blocking transactions as a rule to avoid compliance issues, it will simply flag the transaction for further investigation.
You can then take a detailed look at the transaction and use your team’s payment experience to make the right decision. By combining a human approach with the efficiency of technology, your bank can offer intelligent, effective transaction monitoring.
A great PayFac-as-a-Service platform also ensures you have constant access to a comprehensive record of successful and flagged transactions, simplifying your audits and regulatory reports.
Building healthy ISO partnerships
Although working with ISOs can be beneficial, the onboarding process can be challenging considering the wide range of merchants they bring to your banking platform. Monitoring compliance, assessing risk, and keeping track of transactions for ISOs can quickly overwhelm even the most resourceful regional bank or credit union.
Most large ISOs also have fixed systems and processes within their own payment acceptance workflows that can be challenging to integrate. As a result, many banks miss out on the growth opportunities offered by onboarding ISOs.
But what if you could offer ISOs a way to grow their business by working with you? The right PayFac-as-a-Service provider can offer your ISO clients integrated payments and additional benefits to help manage their business and list of merchants.
Example of how payment facilitation-as-a-service can benefit your ISO partnerships
White-labeling your PayFac-as-a-Service provider’s platform allows you to brand your payment platform as you like it. You can make every part of the payment facilitation process your own and offer it directly to ISOs looking for payment acceptance solutions.
Alternatively, you could offer the PayFac-as-a-Service platform to your ISO clients to white-label themselves. This gives them the ability to brand it accordingly, offer their merchants an integrated payments acceptance solution, and grow their business.
By allowing ISOs to use your PayFac-as-a-Service provider’s platform as their own, you make their jobs easier and build valuable loyalty to your banking platform.
The result is increased payment volumes over time and better relationships between your bank and your ISO clients.
Offering SMB clients several payment acceptance options
Consumers have become accustomed to using a wider variety of payment channels than ever before. According to McKinsey and Company, digital payments penetration reached 78 percent in 2020, leaving merchants no choice but to offer consumers several payment options. As a result, mobile wallets, credit cards, virtual cards, ACH transfers, and payment processors like Stripe or PayPal have become some of the most commonly used payment acceptance channels.
To stay competitive within their respective industries, SMBs need to offer these options to their clients. To do so, they need access to the right technology to integrate these payment solutions into their business platforms.
Working with the right PayFac-as-a-Service provider can help you seamlessly offer all of these digital payment options to your SMB clients.
A single PayFac-as-a-Service solution gives your bank the ability to help your SMB clients reach their objectives by:
- Retaining more customers – Keeping up with the current payment acceptance solutions ensures your SMB client won’t lose its customers to other, more technologically advanced alternatives.
- Offering more value to customers – Using your PayFac-as-a-Service solution allows SMB clients to offer an all-in-one payment acceptance solution to their customers. Simplifying the payment process adds value to customers’ interaction with an SMB.
- Increasing customer loyalty – Thanks to an up-to-date, integrated payments acceptance solution, SMB clients can expect greater loyalty and return business from their customers.
- Saving development costs – By integrating your PayFac-as-a-Service provider’s payment solutions into their platform, SMBs avoid the hefty expenses associated with developing a payment acceptance solution in-house.
- Increasing flexibility in their payments infrastructure – Offering their customers a variety of payment options sets most SMBs apart as customer-centric, responsive businesses with their clients’ CX and convenience in mind.
These benefits allow SMBs to grow while staying loyal to your banking platform and offering you more business and clients along the way.
How GETTRX’s payment facilitation-as-a-service can help
GETTRX has over three decades of experience in the payments industry, making us the ideal PayFac-as-a-Service provider. Working with us, your bank’s digital transformation will benefit from the following features:
- A fully owned tech stack – We don’t outsource any part of our infrastructure. As a result, we avoid the many risks associated with entrusting coding or platform development processes to third parties.
- Comprehensive white-labeling opportunities – Seamless integration into your banking platform and that of your SMB clients’ brand allows you and your clients to own the payment experience.
- Intelligent fraud and compliance monitoring – Our experience working with high-risk industries means we know what steps to take to avoid disruptions in your clients’ payment acceptance abilities by mitigating the risks of unexpected compliance or risk issues.
Large banks are making full use of the benefits provided by digital transformation. As a result, smaller banks and credit unions are at risk of being left behind and losing their clients to these larger entities.
By working with an experienced payfac-as-a-service provider, your bank can boost its digitalization process and overcome the hurdles posed by growth and payment transformation.
Frequently Asked Questions
Why is a plug-and-play payment facilitation-as-a-service solution better than building your own platform?
There are many risks associated with becoming a payment facilitator. Compliance regulations are complex and the process is incredibly costly. Smaller banks and businesses are in a position to benefit much more from a plug-and-play PayFac-as-a-Service solution thanks to the following features:
- The ability to white-label and integrate payment acceptance solutions into their existing platform.
- Intelligent fraud and compliance monitoring is provided by the PayFac-as-a-Service provider thanks to its wealth of experience in the payment facilitation industry.
- Significant cost-cutting opportunities as a plug-and-play solution requires no further development before being used.
What are the features of a great payment facilitator?
There are numerous features to look for and terms to know before working with a PayFac. A great PayFac-as-a-Service provider should offer the following features to its clients:
- Fast and compliant digital merchant onboarding.
- Intelligent transaction monitoring automation.
- The ability to white-label the payment acceptance platform and offer it directly to your SMB and ISO clients.
- Compatibility with various payment acceptance channels like mobile wallets, PayPal, Stripe, and credit cards.
Why is digital transformation vital to regional banks and credit unions?
Most big banks offer their clients advanced digital solutions to otherwise mundane processes like onboarding and transaction monitoring. Failing to provide the same or better features could lead smaller banks and credit unions to lose their customers over time.