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The Green Sheet Online Edition

October 09, 2017 • Issue 17:10:01

Readers Speak

Meeting the Stripe challenge

I'm looking into competing directly with Stripe in some vertical niches. A few developers I've talked to rave about their technology/API/ease of integration. The gateways I've shown them were apparently not impressive: code way out-of-date.

I was wondering if you had any insight into what all gateways are out there. Other than Auth.net and a few of the bigger names, it's hard to find any good info. Mainly looking for a solution with up-to-date, robust code, as well as Level II and III support. Any help you could give me would be greatly appreciated.

Ryan King, Guardian Payment Systems Inc.


Thank you for getting in touch. We haven't compiled data comparing features of payment gateways. However, here is information Matt Hyde, Vice President of Marketing & Partner Development at NMI, offered in response to your request:

The question you've asked is one we are hearing more and more frequently. Increasingly, companies are exploring how they can offer their own Stripe-like solution to their merchant customers. This solution has two characteristics which are very appealing to merchants:

  1. A frictionless application and onboarding experience.
  2. A much easier to understand, pay-as-you-go, flat price to process payments.

There are a couple reasons Stripe can deliver this:

  • First, they have registered as a payment facilitator with a sponsor bank. The main difference between a payment facilitator and a traditional merchant acquirer is with a traditional merchant service provider the acquirer individually underwrites and approves each merchant who then receives their own merchant ID (MID).

    With a payment facilitator, the sponsor bank underwrites the payment facilitator as a master merchant with all merchants boarded as sub-merchants underneath them. The payment facilitator is responsible for application processing, boarding, risk monitoring, billing and reporting for all sub-merchants they sign up. The application process is significantly streamlined, merchants are approved within a few minutes and set up with a sub-merchant ID off of the payment facilitator's master-merchant ID.

    The net effect is that applying, getting approved and being able to accept payments with a traditional merchant service provider can take 24 to 36 hours or more and the same process literally takes just minutes with a payment facilitator. Because with the payment facilitator a merchant isn't getting their own merchant account, payment facilitators don't have to charge the monthly fees that are assessed at a MID level.

  • Secondly, in addition to registering as a payment facilitator Stripe built a technology platform that could deliver and support payment facilitator capabilities. Unlike with traditional merchant service providers, payment processors don't have an out-of-the-box technology solution for payment facilitators. Most payment gateways are geared toward servicing traditional merchants with individual MIDs, with a narrow focus of switching transaction data to processors.

    Payment facilitators need more. They need to provide a sub-merchant boarding process. They are responsible for generating and delivering sub-merchant processing statements. They need to generate daily funding instructions so their sub-merchants get paid. A payment facilitator is also responsible for delivering chargeback notifications to their sub-merchants, and everything else that an ISO traditionally does.

    NMI's Payments Enablement Technology Platform is designed to support the technology needs of payment facilitation. It's built on a multitiered hierarchical structure and is a white-label solution that is completely brandable. Our FACe (Facilitator Enablement) product has a plug-and-play solution for payment facilitators. The APIs for FACe are JSON and are developer friendly. With this platform, payment facilitators can handle onboarding, sub-merchant account creation and management, KYC services and reporting, and much more.

    If you decide to explore payment facilitation, many more questions will arise, like:

    • Which payment processors or sponsor banks are underwriting payment facilitators?
    • Is my business a good fit for the payment facilitation model?
    • What will I be required to do in order to operate as a payment facilitator?
    • Should I build my own technology or partner with a technology provider?

    NMI has helped a number of businesses navigate the complexities around payment facilitation. Whether you plan to use our technology or not, we are happy to help you navigate the waters of this exciting and disruptive approach to merchant acquiring.

Thank you, Matt, for your informative response.

Ask us!

Would you like more information on a particular topic? Do you have a pressing issue to bring to the payments community's attention? Tell us at greensheet@greensheet.com. end of article

The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.

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