Swing The Risk And Benefit From The Math

As an industry, we can immediately grasp the benefit and value of the Payment Facilitator model. We can examine, cipher and build the mathematical equations around the cost/benefit of expedited on-boarding, the value of aggregated funds, reduced cost of signing and supporting as well as the increased sales funnel due to expanded MCC’s.

What we are minimizing, or perhaps overlooking all together in the value chain formula, is the shift in the type of loss category experienced with traditional direct merchant portfolios as compared to a PayFac operating sub-merchant model. In traditional direct portfolios, loss categories that skew to the high end of the scale typically include bankruptcies or other financial interruptions, merchant/cardholder collusion/bust out schemes and cardholder fraud that results in Chargeback losses. The common theme of these loss categories - they are event driven and typically unpredictable.