Whether you own an online store or any other Software-as-a-Service (SaaS) business, there are various things you can do to increase your overall income. Monetizing the payments to your business is one of those things.
However, it’s a broad topic that can only be dissected by looking closer at the available options. That’s what this article is all about.
That said, here’s how you can monetize payments and bring more money into your business:
1. Enter into a revenue-sharing agreement
This may be a fairly new topic to you, but the good news is that it’s not complicated. If you ask around, however, experts will tell you that it’s a better alternative to opening a merchant account that you will manage on your own.
A shared revenue model is simply what it sounds like. You will share the revenue that comes from payment processing with a payment facilitator (PayFac). Signing up with a company like Tilled that offers PayFac-as-a-Service that has built-in rev share means you can white-label their services.
That way, your customers will be using the payment service as if it belongs solely to your company. This creates room for trust and the establishment of personal relationships with clients.
2. Resell payment services
If you have the right customer base, you can become a vendor who resells PayFac services. This may not be the easiest way to monetize the payments that come to your business, as it requires you to be a payments expert. Additionally, you may have to set up a team that handles this function.
However, if your target market can easily accommodate marked-up services, you can successfully establish yourself as a reseller. In that light, this idea would work best if you can identify an audience that is struggling to find the right PayFac and is willing to do whatever it takes to get such services.
3. Go for a cost + revenue model
If you’re against the shared revenue model, you can go with this one. It works similarly to the shared revenue setup, but it will be up to you to set the margin value.
For this model, your PayFac provider will charge you a defined amount for each transaction. This amount will consist of a payment facilitation cost and the PayFac’s revenue. For instance, a payment facilitation cost of 2.01% plus the PayFac’s revenue of about 0.38%, which brings the total processing costs to 2.39%.
You can then set a margin of 0.41% for each transaction, which brings the total transaction fee to 2.8% of the transaction amount. In this case, the PayFac provider will have made a revenue of 0.38% of the transaction amount while you make 0.41%.
The only downside to this model is that your liability will be higher as opposed to the shared revenue model.
4. Employed grouped pricing
You can also make money from payments by introducing a tiered pricing model. For example, you can group the pricing plans into Personal, Business, and Commerce. The Personal category will be the cheapest in this model, but it will be more expensive per transaction since there’s a smaller volume of transactions.
Conversely, the commerce plan will be available to merchants who have a higher volume of transactions. For this plan, the cost per transaction will be lower, yet will bring more income due to the larger volume of payments.
Make more money with PFaaS
If you are looking to upscale your business profits by monetizing payments, shared revenue is a surefire solution. It may look complicated at the start, but once you understand how it works, you won’t want to look back.
It’s all a matter of partnering with the right PayFac provider, and at Tilled, we strive to be the best. So go ahead and contact us today to learn more about our services and quick-start your way to higher revenue.