The global COVID-19 pandemic has dramatically accelerated online activities all around the globe, including online shopping and eCommerce transactions. 

Many new eCommerce businesses have opened up during 2020 and 2021, and there are also many traditional (offline) businesses that are ‘forced’ to adopt the digital ecosystem and start selling their products online.

With that being said, many businesses are now looking for ways to easily start accepting online credit card payments, and this is why the demand for payment facilitator businesses is also rapidly growing, making it a lucrative business opportunity with a great potential for growth.

Yet, the entry barrier for becoming a payment facilitator can be quite high due to the fact that you’ll be required to undergo complex and often time-consuming underwriting and audit processes before you can even start the business, which may translate into considerable upfront investments. 

Working with a reliable payments consulting firm can be the most viable and cost-effective way to start a payment facilitator business, and in this article, we will learn how a payments consulting firm can help start a payment facilitator business. 

 

Starting a Payment Facilitator Business: How Payments Consulting Firm Can Help

Phase 1: Setting Up Infrastructure

 

To be approved as a payment facilitator business and receive a Payment Facilitator ID (PFID) from an acquiring bank, a business must first prepare itself with adequate infrastructure, including setting up company-wide policies and procedures to stay compliant with the card issuer’s and acquiring bank’s standards.

This phase will involve several key steps:

Establishing a Payment Gateway System

Here the business has several options to consider: 

1. Building its own payment gateway system from scratch. This is the most difficult, expensive, and potentially time-consuming option but will provide the business with the most versatility and customizability.
2. Using established third-party vendors like Stripe, Paypal, or Google Checkout, among others. Reliable, but you won’t get too much freedom in customizing the experience.s
3. Integrating an open-source payment gateway solution. It can offer a certain degree of customizability but will require technical know-how.
4. Get a white-label payment gateway solution built for you. It can be expensive, but you’ll get the same versatility of having your own solution built from scratch without the challenge of the development process.

 

A payments consulting firm can help the business in choosing the best possible option according to various different factors and may also help secure partnerships with third-party vendors.

Licenses and certifications

Before a business can get approved as a payment facilitator, it has to first ensure compliance with PCI-DSS ((Payment Card Industry Data Security Standards) and acquire the required certifications. If you are planning to support in-person transactions, you will also need to acquire EMV (Europay, Mastercard, and VISA0 certification. 

The payments consulting firm can help you identify the certifications and licenses your business must acquire before starting the payment facilitator business while also providing an actionable plan to :

• Register as a payment facilitator with relevant credit card networks. If you are planning to operate in multiple countries, you may also need to register with different card networks in each country.
• Applying for MTLs (Money Transfer Licenses) if the payment facilitator business is planning to control the flow of funds
• Apply for relevant regional licenses and certifications depending on the payment facilitator business’ target of operations. For example, Brazil and EU countries will require separate regional licenses.

 

Approaching Merchant Acquirers

After the business has prepared the basic infrastructure, it can start looking for a potential merchant acquirer (whether an acquiring bank or a bank-sponsored entity) that will then sponsor the business and provide it with a Payment Facilitator ID. 

The help from a payments consulting firm will be very important in this stage, especially in approaching the merchant acquirer with a strong business plan to ensure approval. 

 

Phase 2: Preparing software and applications

Preparing a customer-facing application

The business should prepare a customer-facing software/application offering at least basic features like a merchant dashboard, payout management (withdrawal, income tracking, etc.), dispute and chargeback management, etc. The business can either opt to build the application from scratch or use a third-party solution.

 

Setting-up onboarding/underwriting system

The payment facilitator must also prepare a system to ensure a streamlined and automated underwriting system that will cover:

• Identity verification: verifying the sub-merchant’s identity via KYC (Know Your Customer)
• Automatic detection of blacklist: for example, by automatic checking of OFAC sanctions list and Mastercard’s MATCH (Member Alert to Control High-Risk Merchants) list.
• Automatic assessment of risk profile: checking the sub-merchant’s compliance risk and credit history.

 

Phase 3: Managing ongoing processes to ensure compliance

 

A payments consulting firm will also help payment facilitator businesses to maintain healthy day-to-day practices to ensure compliance with relevant regulations, including but not limited to:

• Reporting/audit trail: regular generation of required reports like tax forms and audit trails, depending on the case-by-case needs.
• PCI-DSS validation: a payment facilitator business will need to validate the level 1 PCI DSS compliance every year and re-validate when there are any major changes in the business.
• Risk monitoring: ensuring all sub-merchants are operating within the risk thresholds and updating risk thresholds as needed. Depending on the size of the payment facilitator business, you may need to employ in-house risk analysts.
• Fraud prevention: a viable option is to partner with a third-party fraud prevention solution. Nowadays, there are affordable fraud preventions solutions that will only cost you below $0.1 per transaction. 
• Chargeback management: can be very expensive if not managed well. A payments consulting firm can help you establish clear policies to minimize chargebacks.
• Payout management: establishing a system to ensure each sub-merchant receives their payout on time while also managing disputes.
• Registration/license renewals: re-register as a payment facilitator with Visa and Mastercard each year ( will cost$5,000/year each). MTLs must be renewed every two years.

 

Wrapping Up

A payments consulting firm can help your business:

• Preparing your infrastructure: establishing company-wide policies, procedures, and infrastructure to ensure compliance with card networks and acquiring banks’ standards.
• Get approved as a payment facilitator: helping your business in undergoing the lengthy underwriting process and very detailed audits in order to be approved as a payment facilitator.

Preparing your team:  RPY Innovations can help you establish regular training for your existing and future team to ensure compliance.