In the ever-evolving landscape of digital commerce, businesses are constantly seeking innovative ways to streamline operations, enhance customer experiences, and drive revenue growth. One such strategy that has proven to be incredibly effective and continuously evolving is forming payment processing partnerships. These strategic alliances can significantly expand your customer base, improve customer satisfaction, and of course, increase your revenue.

In this article, we are going to cover the various payment partnership types and analyze the pros and cons of each so that you can identify what type would be best for your business.

As you read, we encourage you to notate a few things about your business so that you can get a sense of where you fit within the word of payment partnerships: 

  1. How does your business operate?
  2. What resources and capabilities do you currently have?
  3. What is your tolerance for risk?

Understanding Payment Processing Partnerships

A payment processing partnership is a business relationship between two entities that enables them to offer payment processing services to their customers. These partnerships can take many forms, but they typically involve one company providing the technology, infrastructure, or expertise necessary to process payments, while the other company provides access to a customer base or sales channels.

The most common types of partnerships include referral, reseller, and integration partnerships. However, as technology shifted in the last 10 years integration partnerships grew and expanded into a variety of new sub-partnerships. Each type offers unique benefits and challenges that should be considered based on your company’s goals and resources.

What is a Referral Payments Partnership?

A Referral Payments Partnership is a strategic alliance where one business, the referrer, recommends the services of a payment processing company to its clients or customers. In this simple model, the referrer directs potential clients to the payment processor. For each successful referral, the referrer receives a commission or fee.

For the right business, this type of partnership is a win-win scenario. The payment processing partner gains new customers, and the referring partner earns a share of the revenue. For instance, an accounting firm might partner with a trusted payment processing company to offer its customers a seamless way to accept payments while reducing fees. The accounting provider would refer its customers to the payment processing company, and in return, receive a share of the revenue on a monthly basis.

What Are The Pros and Cons of Referral Partnerships?


  • Additional Revenue: The referrer earns a commission for each successful referral, creating a new revenue stream.
  • Enhanced Customer Value: By offering a trusted payment processing solution, the referrer can enhance the value they provide to their customers.
  • Low Barrier to Entry: Becoming a referral partner simply requires strong relationships effectively making it a partnership that just about any business can reap the benefits from.
  • Fit for Any Business Type: From associations to banks to software providers, this traditional partnership is fit for any business type.


  • Limited Control: The referrer has limited control over the payment processing service, which could lead to customer service issues if the payment processor fails to deliver a high-quality service.
  • Dependency: The referrer’s additional revenue is dependent on the payment processor’s ability to convert referrals into customers.
  • Lowest Revenue Opportunity: The lower barrier to entry (lower risk) also means lower revenue opportunities. Consider your goals and resources.

Despite these potential drawbacks, when executed correctly and with the right payments partner, referral partnerships can be a highly effective strategy for businesses looking to expand their services and increase revenue.

What is a Reseller Payments Partnership?

A Reseller Payments Partnership is a business model where a company not only refers clients to a payment processor but also sells the processor’s services under its own brand. This allows the reseller to fully integrate payment processing services into its existing suite of services without need for their own processing technology. The reseller handles the customer relationship, including sales and support, while the payment processor takes care of the technical aspects of processing payments and the PCI compliance burden.

For instance, an independent sales organization (ISO) might partner with a payment processing company to offer processing services to its customers. The ISO would sell the payment processing service as if it were its own product setting its own pricing, and the payment processing company would handle the technical aspects of payment facilitation through processing, settlement, and reporting.

Pros and Cons of Reseller Partnerships


  • Expanded Offering: The reseller can expand their product or service offering, providing a more comprehensive solution to their customers.
  • Increased Revenue: The reseller earns revenue from the sales and fees of the payment processing service. 
  • PCI Support: Operating as a reseller reduces your organization’s PCI scope. The payment processor takes on most of the risk in this model.
  • Improved Control: While not substantial, a reseller partnership does offer more control of the products pricing and the overall support provided. The payments processor is still taking on the technical aspects of processing.


  • Increased Responsibility: The reseller is responsible for the sales and support of the payment processing service, which can require significant resources.
  • Brand Risk: If the payment processor fails to deliver a high-quality service, it could negatively impact the reseller’s brand.

What is an Integrated Payments Partnership?

An integrated payments partnership is a strategic alliance where a software provider integrates or embeds the payment processor’s technology directly into its own platform or software. This creates a seamless user experience, as customers can complete transactions without ever leaving the platform. This type of partnership is particularly popular among software and platform providers that want to enhance their offerings with integrated payment capabilities.

For example, an automotive repair software or retail point-of-sale platform might partner with a payment processing company to integrate its payment processing technology directly into their solution. This allows the platform’s users to accept payments directly through one single solution, providing a seamless checkout experience for their customers.

Pros and Cons of Integrated Payments Partnerships


  • Enhanced User Experience: The integrating business can provide a more comprehensive and seamless experience for their users by offering integrated payment capabilities.
  • Improved Retention Rate: Users leveraging the software and payment integration are far less likely to seek alternative solutions.
  • Competitive Advantage: Payment integrations with the right partner and the right solution could be the deciding factor in a user’s decision to leverage your software or not.
  • Revenue Advantages: A payment integration allows you to have more control over how you monetize your solution. This model gives you a bigger slice of the revenue generated from transaction fees and other value-adds that a referral program just can’t offer.
  • Go To Market Support: Completing an integration is only half the battle. With the right partner, they will help you take your new integration to market through marketing and sales focused support.


  • Technical Complexity: Integrating the payment processor’s technology into the business’s platform or software can be complex and costly. The right payment partner will support you along this journey.
  • Payments Dependency: The software or platform becomes dependent on the payment processor for a key part of their user experience, which can be risky if the payment processor experiences downtime or other issues.

Other types of Integrated Payment Partnerships

The world of business is moving to software-as-a-service and payment integrations should be considered an essential to a software’s solution.

So with that being said, before we move on from integrated partnerships, it’s important that we go a step deeper into the various types of partnerships that continue to emerge within the industry.

What is Payment Facilitation?

Payment Facilitation is a partnership model where a software platform, acting as a master merchant, provides the technology for its users to accept payments directly. This eliminates the need for each user to establish a separate merchant account. The benefits of this model include control over the user experience, additional revenue streams, and faster onboarding. However, the software platform is responsible for underwriting and risk management for its sub-merchants, and sets up a master merchant account with a payment processor or acquiring bank.

Becoming a payment facilitator requires significant investment in time and resources. It involves compliance with card network rules, financial audits, and the development of underwriting and risk management capabilities. Despite these challenges, it offers the most control and revenue potential, making it an attractive option for many software platforms.

What is PayFac-As-A-Service (A.KA. PayFac Lite)?

There are other hybrid models to consider as well, such as PayFac-As-A-Service (A.K.A PayFac Lite). This type of structure allows for software providers to reap most of the benefits that a PayFac model would offer, without having to have the technology, resources and/or the full level risk tolerance it takes to become a full on PayFac. 

As a general rule of thumb to help you consider the differences, the more risk that you are willing to take within payment processing, the bigger slice of the revenue pie you can take.

Wrapping it up. 

Today, payment processing partnerships play a crucial role in the payments industry. They enable businesses to accept a wide range of payment methods, provide a seamless payment experience for customers, and shape the future of electronic payments. Whether it’s a referral partnership that allows businesses to earn a commission for each successful referral, a reseller partnership that enables businesses to sell the processor’s services under their own brand, or an integrated partnership that provides a seamless user experience, each type of partnership offers unique opportunities for businesses.

By understanding the nuances of these partnerships and carefully considering your own needs, goals, and capabilities, businesses can harness the power of payment processing partnerships to drive their success.

Unsure of what path is right for you? Chat with one of our consultative payment experts today.

Article by Clearent by Xplor

First published: August 04 2023

Last updated: May 30 2024