Partners are an integral part of the fintech ecosystem and are helping to shape the fintech landscape both in the present and in the future. The term “partners” broadly describes two different but related kinds of financial entities: Independent Sales Organizations (ISOs) and Payment Facilitators (PayFacs). Partners help connect merchants and businesses to payment services.
What Are ISOs and PayFacs?
Independent Sales Organizations and Payment Facilitators are two related but distinctly different types of financial entities.
ISOs act as a middle-man in the payments world, helping to create and manage accounts for their merchants. ISOs directly interact with businesses such as fintechs directly so the merchants and businesses that they manage don’t have to. Fees are charged to the merchants based on transaction volume. Larger businesses or merchants with higher transaction volumes tend to use ISOs for their services.
PayFacs are organized differently. PayFacs help to facilitate payments for their merchants. They provide a narrower range of services. PayFacs partner with a service provider, and manage the main merchant account. The merchants under the PayFac have linked accounts under the partner that manages the account for them. Smaller businesses or merchants with a lower transaction volume use PayFacs. PayFacs usually have a flat fee pricing structure.
Merchants and businesses across the world work with partners to simplify their business and avoid the process of account management and financial integration. Partners enable business owners to focus on what matters most for the business and leave the financial side of business management to other payment professionals.
Partners Shaping the Fintech Landscape
Partners are shaping the Fintech landscape because they are enabling a broader group of merchants to access the financial services that fintech companies can provide. Whenever a new or established business seeks to sell a product or a service to their customers, they must integrate with banking networks and card acquirers in order to make payments and disbursements. This becomes crucial when the business has cross-border transactions, or operates within multiple countries.
A certain level of risk management is involved. Integrating into traditional financial networks using traditional methods such as integrating with banks directly can prove to be costly and time-consuming. Business owners must consider the opportunity cost and impact to their business.
But when a merchant or business works together with an ISO or a PayFac, they easily gain access to the needed financial integrations. Most Partners also work with fintech companies because of the ease of use, easy integration, and clear onboarding processes.
Fintech companies provide a viable alternative to traditional financial networks. Rapyd provides the smooth integration that Partners seek. The merchants that work with Partners can easily gain access to a global financial network that enables businesses to have payments their way, disburse funds globally, use payment links, utilize fraud prevention, design hosted checkout pages and more.
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