E-Commerce transactions have exploded recently due to the pandemic. The higher demand has created a huge need for options outside of the standard Square, Stripe, and PayPal options when it comes to payment processing in an e-commerce environment. Don’t hear what we’re not saying. For many businesses, these platforms offer a good value and simple integrations for the average do-it-yourselfer. For businesses just starting out or ones that don’t do a ton of volume through e-commerce, these PayFacs (payment facilitators) may be the best option. The aforementioned PayFacs are essentially pay-as-you-go services that typically don’t have any static monthly fees. So, you only pay when you use it. One of the tradeoffs is that your rates are [typically] much higher than a provider with an interchange+ pricing structure.
PayFacs has a quick, simple onboarding process. Because you don’t own the merchant account, but rather you’re using a sub-account underneath their account, the approval process is fast – usually minutes. This is a dramatic shift from a traditional merchant services account that can take days to approve. PayFacs don’t underwrite every merchant for risk before allowing them to process. Instead, the account is under a constant state of underwriting. This means that the likelihood of chargebacks or funding delays goes up dramatically with PayFacs because there was no in-depth approval process to begin with. Since they own the account, they shoulder all the risk. This means that the payment facilitator becomes judge, jury, and executioner in the event that something goes wrong – which is bad news for the merchant. Payment Facilitators also have notoriously poor customer service. Again, it’s designed to be a self-service platform, so trying to get a timely response via email or actually getting a human being on the phone is virtually impossible.
With a traditional merchant account, the processor and acquiring bank do the underwriting in the beginning to assess how much risk the merchant poses to them and set the account parameters accordingly. This [usually] means less funding delays and better opportunities to dispute chargebacks as well as better pricing (when using interchange+). While most traditional processing accounts have static monthly fees, the effective rate in the end tends to be much lower with decent volume. When the volume is low(er), the static fees weigh more heavily on the overall effective rate.
The Magothy Payment Gateway, powered by NMI, has and extensive list of software and shopping cart integrations to enable smooth e-commerce transactions. We have a fraud protection suite called iSpyFraud that allows merchants to customize their gateway and transaction parameters to minimize fraudulent transactions and subsequent chargebacks. For an extensive list of shopping carts, software integrations, and API documentation be sure to visit our integration portal.
We’re also resellers of Authorize.Net, a Visa company, which probably has more software and shopping cart integrations of any gateway platform in the world. Be sure to check out their partner directory to see if your software is compatible with their gateway.
With the flexibility of multiple gateways, the transparency of interchange + pricing, and tech support from actual human beings, we believe that we are in the best position to meet your e-commerce processing needs.