With the development of integrated payment setups, businesses have a new revenue opportunity available. The challenge is launching a processing setup quickly without having to build it from scratch.
For independent sales organizations (ISOs), SaaS businesses, resellers, and fintech startups, white-label payment processing offers an effective, scalable way to set up payment operations without having to create everything in-house. White-label processing allows businesses to incorporate payment operations under their own brand, which improves the customer’s experience and overall retention.
From decreasing the time to market to limiting operational complexity, white-label processing offers a number of important benefits. Read on to see how this approach has become a popular way to generate a recurring revenue stream for today’s businesses.
TL;DR
- Through white-label processing, businesses can integrate payment processing into their operations without having to design it on their own.
- SaaS companies can embed white-label setups into their software experience. By processing payments, they can generate an additional revenue stream.
- ISOs can benefit from better branding and increased control over their merchant relationships.
- White-label payment gateway resellers can develop residual income streams under their company’s brand.
- In general, white-label processing is faster and less complex than becoming a payment facilitator.
- This approach is an effective way to launch payment operations without investing years in developing a payment processing setup.
- Businesses can benefit from better scalability, improved customer retention, reduced compliance burdens, reduced operational complexity, and recurring revenue streams.
- To find the right provider, companies should ask about fees, transparency, chargeback policies, fraud prevention, onboarding processes, and scalability.
- This type of setup is especially appealing to businesses that want a payment monetization strategy or embedded finance options.
What Is White-Label Payment Processing?
White-label payment processing allows businesses to embed financial services under their own brand. Instead of having to set up the infrastructure themselves, businesses can use the white-label provider’s infrastructure and technology.
As a result, businesses can enjoy the branding benefits and control that come with having their own payment processing setup without any of the technological requirements. Companies can create tailored payment experiences quickly and let the provider handle the compliance legwork.
Who Does White-Label Payment Processing Work Best For?
White-label merchant processing is designed for businesses that want branded payment services. It allows you to build customer relationships through a trusted gateway without having to create the infrastructure on your own. Because of this, white-label processing tends to be incredibly effective for SaaS companies, ISOs, resellers, and fintech startups.
SaaS Platforms
SaaS companies rely on white-label processing to incorporate payments into their software configuration. For the user, this creates a seamless experience and simplifies the payment process. In turn, easier payments can improve customer satisfaction and retention.
Often, this type of processing approach is used with e-commerce platforms, scheduling software, and CRM platforms. It can be used for SaaS purposes as diverse as healthcare software and property management systems.
ISOs
White-label processing is an effective tool for ISOs that want to control the entire merchant experience. ISOs can use a white-label payment processor to build better brand recognition, access residual revenue opportunities, and improve their retention. In a competitive market, having access to white-label processing can help ISOs stand out to merchants.
Resellers
A white-label payment gateway reseller can increase their monthly recurring revenue and customer lifetime value. Instead of referring clients somewhere else for these services, the resellers can integrate payment solutions directly into their own brand. Then, they can manage customer relationships and pricing, while the provider handles all of the backend infrastructure.
Fintech Startups
Fintech businesses can use white-label processing to immediately launch products without having to be a full payment processor. This can significantly reduce time to market and the overall compliance burden. For startups that are operating on a shoestring budget, white-label infrastructure is especially useful.
The Basic Differences Between ISO, Gateway, PayFac, and White-Label Processing
Businesses can access payment infrastructure in different models. Other than white-label processing, payment gateways, ISO, and payment facilitators (PayFacs) are also popular options. To get a better grasp of how these options work, let’s check out some of the basic similarities and differences.
ISO
An ISO sells merchant accounts and processing services on behalf of processors or acquirers. The bank is responsible for the payment infrastructure, underwriting, and compliance. Meanwhile, the ISO only needs to handle sales, relationship management, and merchant acquisition.
Payment Gateway
Meanwhile, a payment gateway is the actual technology responsible for transmitting payment information between the parties involved. For example, e-commerce checkouts and mobile payments rely on a gateway.
While payment gateways are convenient, they aren’t considered a standalone business model like ISOs and white-label payment programs. Instead, they are simply a tool used by these models.
PayFac
A PayFac manages every merchant account within its own ecosystem. Instead of applying for a merchant account on your own, you’re basically set up as a sub-merchant account. This can help accelerate onboarding. In general, the PayFac will be in control of the fraud monitoring, onboarding, compliance requirements, and settlement operations.
White-Label Processing
A white-label payment processor is distinct from a third-party processor because the white-label processor’s payment flow is embedded in the merchant, SaaS, or ISO platform. This allows the merchant to offer a payment solution under their own brand, but the payment processor is responsible for all of the infrastructure, gateway technology, and compliance support.
White-Label vs. ISO vs. PayFac Comparison
To get a better understanding of how white-label payment processing differs from ISO and PayFac, we’ve compiled some of the key differences. For many businesses evaluating payment models, the most noticeable differences involve speed, flexibility, and support. While PayFac is often the fastest to start, ISOs offer more customization options and long-term pricing. Meanwhile, white-label providers offer a mix of personalized services and fast account setup timelines.
| Feature | White-Label Payment Provider | ISO | PayFac |
| What Is It? | A business rebrands another processor’s infrastructure and services under its own brand. | The provider sells merchant accounts on behalf of the acquirer. | Merchants are aggregated under a master merchant account. |
| Who Handles Onboarding? | This is often handled by the backend provider. | Underwriting is dealt with by the processor. | PayFac is directly responsible for handling onboarding. |
| Account Setup Speed | Fast and easy | Slower and relies on traditional underwriting processes | Merchant onboarding is typically very fast, although building and operating a PayFac platform is one of the most complex models to launch. |
| Approval Speed | Fast | Slow | Very fast |
| Merchant Account Structure | Individual merchant accounts | Individual merchant accounts | Sub-merchant accounts exist under a merchant identification account (MID) |
| Ideal For | Businesses that want modern solutions and customized tools | Established companies that want custom pricing structures | Organizations that need a quick, simple setup process |
| Pricing Structure | Custom pricing | Tiered or interchange-plus pricing | Bundled or flat-rate pricing |
| Customer Support Quality | Personalized support | Support quality varies between providers | Self-service with limited support |
| Contract Complexity | Medium | High | Low |
| Risk of Account Holds | Medium | Low if the merchant is established | High if the automated system notices a red flag |
| PCI and Regulatory Compliance Expectations | Provider-supported with merchant responsibilities | Handled by the merchant and the processor or provider | Mostly managed by the platform |
| Strongest Benefits | Customized services | Better pricing options | Speedy onboarding and user-friendly experience |
| Major Drawbacks | The quality relies significantly on the backend processor. | The quality of support varies greatly between different providers. | Merchants have less control if an issue occurs. |
| Customization Options | High | Medium | Low |
| Funding Speed | Average to fast | Average | Fast |
The Advantages of Choosing White-Label Payment Processing
By using white-label credit card processing, you can launch your payment operations without having to build them yourself. You get to use your company branding without slowing down your time to market.
- Better Scalability: One of the biggest benefits is in scalability. As you grow, your payment operations can instantly scale with you.
- Fast Time to Market: Instead of having to set up your payment operations from scratch, you can immediately use white-label merchant processing to collect payments. You don’t have to spend years navigating compliance concerns, designing the technology, and troubleshooting bugs.
- Better Customer Support and Retention: Rather than redirect customers to a third-party payment service provider, you can keep them on your site and reduce your cart abandonment rate. Over time, a streamlined, convenient experience can increase your customer loyalty and retention.
- Reduced Operational Complexity: Your business excels at making a specific product or service. Instead of trying to create your own gateway and processing setup, you can focus on what you do best and leave the operational headache to the backend provider.
- Develop a New Revenue Stream: SaaS businesses often use white-label credit card processing as an alternative revenue stream. In addition to earning money from what people buy on your platform, you can also receive a share of the payment processing revenue.
Checklist for Choosing a White-Label Payment Partner
If you’re searching for a white-label payment processor, there are a few things you should ask your potential partner.
- Are the processing fees transparent?
- What are the cancellation penalties and monthly minimums?
- How quickly will funds be deposited? Is same-day funding available?
- What are the fees for chargebacks and disputes?
- How do you handle refunds and chargebacks?
- What is your policy on payment reserves?
- Does the platform offer the e-commerce, POS, and accounting integrations you need?
- Are onboarding and training included?
- What occurs if your account is flagged for a suspicious transaction?
- Are fraud prevention and PCI compliance offered?
- Is there support for recurring billing and invoices?
- Does the provider work with companies of your size?
- Can the provider continue to support your business as you grow?
- Does the provider offer a month-to-month or long-term contract?
- What industries does the provider serve?
Does White-Label Payment Processing Make Sense for Your Company?
Whether you want to adopt a new payment infrastructure or are interested in reseller opportunities, white-label processing can help. Often, this type of payment processing works best for companies that are in the following situations.
- You need to launch services quickly.
- Your company wants to embed financial services under its own brand.
- You don’t want the added complexity of becoming a PayFac.
- Your business is searching for new revenue streams, such as the revenue generated from processing payments.
- You are looking for a way to improve your customer retention rates.
From boosting revenue to more branding control, white-label processing is an effective tool for ISOs, SaaS platforms, resellers, and other businesses. By working with PayCompass, you can learn about how this setup can affect your bottom line and long-term growth.
Final Thoughts
Through white-label payment processing, businesses can participate in the payment processing industry without having to design their own payment operations. These systems can provide branded customer experiences and modern backend payment infrastructure, so customers can enjoy a fast, seamless payment experience.
For businesses, white-label setups are an effective way to generate an additional revenue stream. They can help you improve your customer retention, simplify your regulatory compliance, and lower your time to market.
SaaS businesses, ISOs, and resellers can take advantage of white-label processing. While SaaS companies can use this embedded approach to boost revenue, ISOs can benefit from greater brand control over the payment process. At the same time, white-label processing helps resellers expand their service offerings and generate ongoing revenue.
Learn more about how white-label processing works by reaching out to PayCompass today.
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