The Hidden Layers of Payment Processing Revealed

So just how many layers are we talking here? You’d be surprised!

But fair warning:

Once you see the additive layers I’m about to show you, you’ll never shop payments the same again. It might even make you a little mad. Why? Because these layers have likely been eating away at your bottom line for years.

All these layers are a common pain many individual businesses share because they typically use traditional or legacy systems to accept payments. The problem is, these systems profit the resellers and processors—not your business.

Think of it like this:

Every business needs to take the “highway to payments” in order to meet consumer demand. But if you’re like most individual businesses, you don’t have the time or the money for development resources. So, you hop on the “Express Lane” to accept payments.

The Express Lane is faster and cheaper at first. However, the convenience comes with much higher fees and processing costs, which quickly erases any upfront savings.

The reason the “Express Lane” to payments becomes so costly goes back to the additive layers between your business and the payment processor.

The tricky thing about additives in the payments layer cake is that it seems like they’re part of the recipe. But in most cases, you don’t need these filler ingredients at all. A modern, tech-enabled processor (👋Finix) that takes a more organic approach lets you trim out all these excess layers.

By organic, I mean only the necessary parts of payment processing in the acquiring stack. This includes:

• Your business

• The acquirer processor

• The acquirer bank

• The major credit card networks

Want to learn more about the full payments stack—including the issuing side? Read our blog “Understanding the Payments Layer Cake.”

The top 3 acquiring filler layers are:

1. Independent Sales Organizations (ISOs)

ISOs are considered additives because they’re resellers in most cases. They don’t own or control any of the technology or deal with money movement. When they sell you a payments service, what they’re actually doing is referring your business to a processor, bank, or PayFac.

2. Independent agents or contractors

Signing up for payment processing via an independent agent or contractor is pretty much the same as doing so through an ISO. The difference is, while they might refer you directly to a PayFac or a processor, it’s more likely they’ll be referring you to an ISO, who then refers you to a bank, PayFac, or payment processor. So there goes an additional layer on top of the ISO layer.

3. Payment Facilitators aka PayFacs

Partnering directly with a PayFac is the closest to organic as you can get when it comes to additional layers in the payment cake. This is because you’re skipping some of the middlemen (ISOs and independent contractors) and they are the only layer between you and a payment processor.

The thing is, the PayFac may or may not own their technology. Because of the massive cost and time investment it takes to build all the payments infrastructure from scratch, many payment facilitators actually run on someone else’s tech, which is only white labeled as their own. This means you’ll still be paying a little more because of this hidden layer.

All in all, it’s possible to have as many as five “additives” wrapped up in your processing costs! For example, depending on the route you took to get on the payments highway, this is what you might be paying for:

• Agent processing rate

• ISO’s processing rate

• PayFac’s processing rate

• PayFac’s tech partner rate

• Processor’s rate

• Plus any other fees associated with each

All of this would be in addition to mandatory credit card assessment and interchange fees.

But there’s even more to it than that.

Customer support: Playing the waiting game

Those layers causing painful rates are also the root of most of your pain when it comes to getting customer support.

Here’s an example of what I mean.

Let’s say you own a bakery and you signed up for credit card processing through an independent agent (filler #2 above). Something goes awry so you reach out to your agent because that’s who you have a relationship with. In fact, it may be the only one on the processing side you know.

The agent is happy to help you. Except they can’t. Remember, they’re just a referrer or reseller. So, you're told: “Don’t worry, I’ll get this fixed for you ASAP."

Here’s what happens next.

The agent calls the ISO about the problem because that’s the only contact they know. But since it's not the ISO's tech, they can't help the agent. So, the agent has to wait for the ISO to contact the next person in the chain (either the processor or a PayFac), and so on.

So you wait. And wait some more.

Unfortunately, this is the vicious cycle many individual businesses go through when trying to get support for their payments service. Not only does this waste time, but depending on the issue you’re having, you could be losing sales. All because of those filler payment layers.

Slow access to reports and transaction data

On top of that, you may have to wait longer to access all of your transaction details. This makes it hard to optimize and manage payments efficiently, especially when it comes to things like disputes and reconciliation.

Now that we’ve covered the pain, let’s talk about the gain. More specifically, how you can gain more time and revenue while simultaneously cutting down the complexity of your payments.

That’s where Finix comes in.

What makes us different is that we build and run all of our own payments technology and infrastructure. And, we’re not just a payment facilitator, we’re a payment processor—one of only a handful in the US. Because of this, we’re able to cut out all the middlemen on the acquiring side of the payment stack and pass the savings down to you.

Here’s what the acquiring side of the payment stack typically looks like with most payment providers:

This is how the acquiring side looks with Finix as a processor:

Ultimately, it’s possible for you to save as much as 25-40% in processing costs a year just because Finix is a processor. We also include “premium” features like reporting that most processors and PayFacs charge extra for at no cost to you. (more on this later).

Support when you need it

Another benefit of using a tech-forward payment processor is support. Because there are no third-party processing dependencies, you’re going straight to the source with your questions or issues. No more agonizing waits for responses or resolutions to your queries.

At Finix, we go the extra mile. As a people-first company, customer support is a top priority for us. We respond to our customers within 15 minutes during normal business hours and also have 24/7 emergency support so you’re never left out in the cold. But don’t just take my word for it. Read what our customers have to say!

Consolidated payment reports and analytics all in one dashboard

Because Finix is a processor, you also get faster access to your payment data. We also offer the ultimate level of transparency by giving you transaction-level details, including fees and interchange. You’ll always know where your money is going.

Earlier data access also leads to faster settling, payouts, and reconciliation, which increases efficiency. At Finix, we provide automated, easy-to-read reports you can see right from your dashboard, including interactive graphs and charts.

And the best part: we include reports and analytics at no extra cost!

Traditionally, payment processors charge for report access. And if your provider isn’t a processor themselves, you’re likely paying for reporting access for two dashboards. This not only costs you more, but it’s also inconvenient to have to dig for payment data from separate sources that also present information in very different ways.

A tech-enabled processor like Finix removes this frustrating layer as well.

Reliable payment processing you can count on

Nothing is worse for online or omnichannel businesses than unexpected downtime. Just one hour of downtime costs an average of $1.1 million for the retail industry. Any interruption to your payment processing can be harmful to your business. This includes scheduled maintenance.

The more layers you have in your processing stack, the more at risk you are for outages and downtime. Furthermore, it’s not always clear what’s causing the problem.

An outage or technical issue could be on your end, the PayFac’s end (or their tech partner’s), or it could be the payment processor that’s having issues. The more layers involved, the longer it can take to resolve the problem and get you back up and running.

Another thing to consider is that legacy payment processors run on outdated technologies that have little to no customization options, require regularly scheduled maintenance, are more susceptible to outages, and require a significant amount of development resources to get started.

What’s unique about Finix is that along with our 99.999% uptime, we don’t have regularly scheduled downtime like legacy processors do. We built our technology and payment APIs to be fluid and adaptable to current and future needs. This way, we can accommodate maintenance and feature updates without causing your business downtime.

We also communicate all upcoming changes well in advance in case you need to make any changes on your end. Plus, our dedicated support team will have your back!

Another benefit of using a tech-enabled payment processor is that it provides you with an “express lane” option—without breaking the bank. At Finix, you’re able to start processing payments within hours thanks to our easy, no-code/low-code solutions. Once integrated, you have access to everything you need in your payments dashboard.

Our no- and low-code features include:

• Virtual terminal

• Prebuilt checkout pages

• Digital billing and invoicing

• Payment links

• Automated and exportable reports and analytics

• Dispute management

• And more

Finix also offers maximum customization and flexibility through API integration for businesses with bespoke needs.

For more information on our specific features and how they can help your business, check out our guide: A Complete Guide to Payment Solutions for E-Commerce Businesses.

Now you know the root cause of most of your payment acceptance pain. While there’s no getting around paying for credit card processing, you can ensure you’re not overpaying by choosing a provider that removes multiple layers from the acquiring side of the payment stack. The closer you get to the processor, the fewer add-on fees you’ll have. You’ll also have better and faster support and quicker access to your payment data and analytics.