The past 15-20 years have given rise to integrated payments and payment facilitation in software platforms. As software companies realized the potential, often of uncaptured payments revenue that existed in their customer base, they ran to develop payment integrations and strategy’s with a wide array of partners. With any legacy providers in any vertical, there are good companies and bad ones. Fair deals and egregious commercials. I have seen everything from revenue shares at 10% with exclusivity to liquidated damages. Modern providers have greatly improved both the commercials and payment stacks, making a strong case for upgrading partners. So it is time to make a change, but how??? The process is not always cut and dry but there is one critical component we will look at, boarding.
Merchant boarding is the most critical step and falls into two categories: Traditional, full merchant boarding and Payment Facilitation sub-merchant accounts. Traditional boarding on full merchant accounts is commonly completed on paper with wet signatures and requires ~40+ data fields of information. Beware as many processors will claim a “Payfac like” boarding experience. This is the commercial equivalent to a hotel saying they have a pool, then showing you your bath tub. Sub-merchant boarding has different requirements per the PCI council, sponsor banks and FINCEN. There are ~14 required fields that are often prepopulated via API and are often accepted by a ”terms and conditions” check box.
This difference is critical in separating from a legacy payments relationship and migrating a customer base. A payfac can provide a mass implementation of the platform’s accounts with automated boarding and minimal disruption. Residuals and platform revenue can move to the new provider without an interruption in service with the flip of a switch. This ability to almost instantly migrate providers can often negate the residual and revenue impact from breaching a non-solicitation clause.
One additional contractual loophole, which often has carve outs in non-solicit language is around functionality. Core functionality can often be enhanced or restricted in order to drive adoption to a new provider. Whatever methods seems like the right approach for your platform, there are options. You don’t have to stay with a bad payments partner.
