During our latest webinar, “Busting Common PayFac as a Service Myths,” we got straight to the heart of the PayFac as a Service (PFaaS) confusion by breaking down 10 common myths. While the payments industry is shifting at light speed, software providers and fintech professionals both are left with varying definitions and implementations of this model.
To break through the confusion, our panelists—Steve and Ron—met to demystify the subject and present a concise, practical roadmap for software providers who want to navigate this tricky terrain. With decades of combined payment and fintech experience, Ron, our VP of Product and Steve our Sr. Marketing Manager, explained why a one-size-fits-all solution is simply not scalable. Their discussion highlighted the hurdles of becoming a true Payment Facilitator and showed how a modular, flexible PFaaS solution can pave the way for sustainable growth.
In this blog recap we summarize 3 of the 10 myths covered in the webinar. To get the full breakdown of all 10 myths, check out the webinar recording.
Why Did We Have This Webinar?
The payments world is evolving at warp speed, and with that comes increased confusion around the latest topic, PayFac as a Service. Repeatedly, software providers have shared their frustrations about the PFaaS solutions they have encountered in the market and wonder if this model is right for their business.
On one hand, there is an urge for the full Payment Facilitator model requiring businesses to invest heavily in compliance, risk management, and operational infrastructure. On the other hand, this may seem too overwhelming and unrealistic for businesses that want a more flexible, incremental solution.
Our webinar was designed to address these challenges head-on. Through the assembly of experts with extensive industry experience, Steve and Ron set out to share what PFaaS means to Clearent, explain its real advantages, and show how a modular, scalable model can be an effective substitute for complete Payment Facilitation.
The session provided insights into why PFaaS exists, the most frequent misconceptions that surround its adoption, and how it can enable software providers to grow their payment solutions without unnecessary complexity.
Setting the Stage: What is PayFac as a Service?
PayFac as a Service is a methodology that streamlines the extremely complicated process of becoming a Payment Facilitator. Historically, organizations that have wanted to be full Payment Facilitators have needed to set up extensive compliance, risk management, and operating structures. PFaaS offers a modular and scalable solution, allowing organizations to adopt a more agile, step-by-step payment facilitation model. But the changing PFaaS market can be confusing. Different providers define and tackle PFaaS in different ways, generating inconsistent practices and expectations. This can make it challenging for software providers to select the right solution that meets their current needs while also facilitating opportunities for future growth.
By creating a path to becoming a Payment Facilitator, PFaaS lets businesses start small and scale up as they advance. This adaptive route helps software providers develop the skills they need step by step without requiring a large up-front investment and the sophistication that is usually required to become an outright Payment Facilitator.
Related Article: What is PayFac as a Service?
A Few Myths Dispelled in the Webinar
Here are 3 of the 10 myths and summaries of the realities of those myths. To get the full breakdown of all 10 myths, check out the full webinar recording.
Myth #1: It’s Better to Become a Full Payment Facilitator Rather Than Use PayFac as a Service
A common assumption in payments is that becoming a full Payment Facilitator is the holy grail. As our experts made clear in the webinar, though, becoming a full Payment Facilitator has significant challenges. To be a full Payment Facilitator, a business must spend a great deal of time developing comprehensive compliance, strong risk management, and extensive operational capabilities. This path typically takes significant upfront and recurring capital, time, and knowledge.
Conversely, PayFac as a Service offers a more strategic “stepping-stone” solution. Instead of diving into the deep end of full Payment Facilitation, PFaaS allows businesses to incrementally expand payment capabilities. This model is designed to meet businesses where they are today and offer a scalable solution that grows with their business.
Through the adoption of PFaaS, vendors can start with a low-cost, low-risk strategy and incrementally move toward full facilitation as their company grows. This incremental, strategic approach is embodied in Clearent’s PFaaS solution. We provide a nimble, step-by-step path, reducing startup costs and complexity and thereby enabling intentional progress on the part of the software provider to whatever level of Payment Facilitation they ultimately desire.
Myth #2: PayFac as a Service Does Not Work for Every Industry
There is a general perception that PayFac as a Service is a one-size-fits-all product. During the webinar, our experts highlighted that while the underlying model appears to be generic, the reality is far more complicated. Each industry has its own compliance, regulatory, and operational challenges that must be solved in a tailored way. A flexible and customizable PFaaS solution is designed to conform to such varying requirements. For instance, MedSpa software providers may want to have specific compliance functionalities aimed at healthcare-related transactions—something not typically available on off-the-shelf models. By offering a flexible, modular platform, PFaaS can be configured to address the unique needs of different industries.
This adaptability emphasizes the importance of having a partner who not only understands PFaaS technology but also appreciates the industry-specific variables that can influence smooth payment facilitation. Through this, businesses have a better chance of overcoming sector-specific challenges and making their payment solutions compliant and functional.
Myth #3: Software Providers Must Complete a New Integration to Switch to Full Payment Facilitation
One of the assumptions that exists in payments is that moving to a full Payment Facilitation model involves completely redoing your current payment integrations.
Clearent’s PayFac as a Service approach offers a smooth evolution from a referral model through to full Payment Facilitation without the need for re-engineering your payment integration. Instead of implementing a provider’s solution all-or-nothing, our scalable platform grows with your business. This shelps you meet your long-term revenue and growth goals faster while allowing you to build out your payment capabilities in stages—adapting to your needs without significant interruption or additional resources.
By leveraging their existing integration, software providers can maximize existing investments while progressively developing their payment capabilities.
Key Takeaways from the Webinar
Busting Common Myths:
Myth #1: Myth #1: It’s Better to Become a Full Payment Facilitator Rather Than Use PayFac as a Service
- Reality: Becoming a full Payment Facilitator requires significant investment in compliance, risk management, and operations. Many software companies underestimate the complexity and costs, making PFaaS a faster, lower-risk way to monetize payments.
Myth #2: PayFac as a Service Does Not Work for Every Industry
- Reality: As a model PFaaS can work for every industry but requires a flexible partner, like Clearent, who understands and can customize solutions based on the software provider’s industry. For example, MedSpa software providers may need tailored compliance features for healthcare-related payments.
Myth #3: Software Providers Must Complete a New Integration to Switch to Full Payment Facilitation
- Reality: Many competitor PFaaS solutions don’t support the ability to transition to full payment facilitation. With Clearent we offer a path from referral model to full Payment Facilitation without the need of completely redoing your payment integration.
Recommendations for Software Providers:
- Assess Your Needs: Consider your existing payment channels and future business goals.
- Take it One Step at a Time: Consider PFaaS a strategic “stepping-stone” that could lead to full payment facilitation.
- Look for Customization: Work with providers willing to provide customized solutions that address your industry-specific challenges.
- Lower Risks: Leverage the flexible, modular structure of PFaaS to lower upfront investments without jeopardizing payment capabilities.
This approach not only reduces short-term financial and operational risk but also puts you on the path to a more robust and adaptable payment infrastructure in the long run.
Wrap Up
To select the right payment model for your business, understanding the real opportunities and challenges beneath PayFac as a Service is essential. Through the removal of some widespread misconceptions, our webinar illustrated the value of a gradual, flexible evolution to full Payment Facilitation. Taking a modular route not only minimizes risk but enables your business to incrementally increase payment capabilities to adapt to changing circumstances.
To get a full breakdown of these myths as well as the other 7, view the entire webinar here: Watch the Full Webinar
by Clearent by Xplor
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First published: March 28 2025
Written by: Clearent by Xplor