Thread by @MicheleTivey

@jkwade @ninamohanty @finix When a software company becomes a Payments facilitator (payfac) they’re not “bringing Payments in house” to do them for themselves.

The software company (already providing a service for merchants: like a cash register) can now also offer to the merchant card processing. 1/

@jkwade @ninamohanty @finix Now, this would mean that the merchant would stop using Stripe if that had been their processor and replace them with the software company using Finix.

But more importantly, that software company is now re-selling the payments services to the merchant using its cash register 2/

@jkwade @ninamohanty @finix The cash register company is buying those services from the acquiring bank (maybe for $0.02 + interchange) & now charging the merchant whatever rate it wants ... but less than Stripe (2.9%+$0.30 per sale.)

The cash register company now sells is software AND payments services 3/

@jkwade @ninamohanty @finix The cash register company is now “the merchant of record” with the bank, which means they assume: • underwriting liability (cash register decides who it is willing to take on as a customer, not the bank) &
• chargeback ratios (importantbfor Visa & Mastercard) 4/

@jkwade @ninamohanty @finix It’s like: if your trash removal service also sells you it’s own trash can, at a markup. But they’ll be responsible if the can breaks, and replace it if somebody steals it.

Finix provides the means to allow the trash company to sell its customers the trash can. 5/

@jkwade @ninamohanty @finix Qs: Are Finix customers (cash register) assisted in finding the trash can supplier (acquirer) Or are they steered to the ones Finix likes?
• Who advises the software companies in choosing acquirers?
• Who provides the appropriate choices?
• Who negotiates buy rates? 6/fin