The word "partner" obscures a commercial relationship
Payment infrastructure providers call themselves partners. The word is not wrong — they do provide infrastructure that enables your program. But "partner" implies a relationship where interests are aligned. In payments, the interests of your infrastructure provider and your program are not always aligned. Understanding exactly where they diverge is the prerequisite for making a good vendor decision.
The core misalignment: every dollar of interchange, float yield, and processing margin has multiple parties who could capture it. Your payment infrastructure provider captures what they can. You capture what you negotiate. The default — what you get without negotiating — almost always favors the infrastructure provider.
BaaS partner: what you get and what you give up
A BaaS provider (Unit, Synctera, Treasury Prime, Column) gives you: a bank relationship you don't have to build yourself, APIs that abstract the banking infrastructure, compliance tooling you don't have to build from scratch, and time-to-market measured in weeks rather than months.
What you give up: interchange economics. BaaS providers share interchange with you on a revenue share basis — typically 40–60% of generated interchange flows to your program, 40–60% stays with the BaaS provider and bank. On a commercial card transaction generating 175 basis points, you receive 70–105 basis points. A direct bank relationship at the same volume captures 140–160 basis points. The BaaS provider captures the difference — 35–90 basis points — on every transaction, permanently, for as long as you stay on their platform.
You also give up: float yield (typically retained by the bank/BaaS layer), product flexibility (limited to what the BaaS provider's stack supports), and bank flexibility (you are on their bank partner, not yours).
BaaS is the right choice when speed matters more than economics optimization. It is the wrong choice when you don't define the migration trigger — the volume or economics threshold — at which you commit to moving to a direct model.
PayFac arrangement: what you get and what you give up
A PayFac arrangement makes you a master merchant who aggregates your customers (sub-merchants) under your merchant account. You get: the full spread between your acquiring cost and what you charge sub-merchants, control over sub-merchant onboarding speed, and better economics than a pure referral or ISO model.
What you give up: chargeback liability. As the PayFac, you own the losses when sub-merchants generate disputes. You must underwrite sub-merchants, maintain chargeback rates below network thresholds, and fund dispute losses when they occur. For programs with customer segments that generate elevated dispute rates — or for SaaS companies that haven't priced chargeback risk into their model — this liability can be expensive.
PayFac economics are meaningfully better than BaaS for inbound payment processing. The right comparison is PayFac versus direct bank — and direct bank wins on economics at sufficient volume, at the cost of greater compliance ownership and operational complexity.
Direct bank relationship: what you get and what you give up
A direct sponsor bank relationship gives you: full interchange capture (140–160 basis points versus 70–105 in BaaS), negotiable float economics (yield on customer balances that BaaS retains by default), product flexibility (any product the bank will support rather than what the BaaS stack enables), and bank flexibility (you chose this bank; you can choose a different one).
What you give up: speed and simplicity at launch. The bank diligence process takes 6–12 months. You own the full BSA/AML program, the KYB/KYC infrastructure, the bank reporting. The operational complexity is real and requires a compliance team or a compliance-capable operator to manage.
Direct bank is right when: your volume justifies the investment (typically $3M+ monthly), you have or can build the compliance infrastructure, and your product requirements exceed what BaaS providers support. It is wrong when you need to launch in 90 days and can define the migration trigger to move there later.
ISO and agent arrangements: what you get and what you give up
ISO (Independent Sales Organization) and agent arrangements earn you referral economics — a residual on processing volume your customers generate, paid by the acquiring bank or processor. You get simplicity: no compliance ownership, no chargeback liability, no bank relationship to manage. You give up almost everything else: the economics are residuals (10–30 basis points), the bank relationship belongs to the processor, and your product control is minimal.
ISO arrangements are appropriate for early-stage platforms testing payment monetization without infrastructure investment, and for programs where the customer segment or vertical makes a deeper program structure difficult (high-risk merchant categories, for example). They are not a long-term strategy for a vertical SaaS company at meaningful payment volume.
The question to ask before choosing a partner
At your three-year projected volume, what is the annual economics difference between this partner arrangement and a direct bank relationship? If the number is under $200,000, the BaaS or PayFac arrangement may be the right long-term choice — the direct model's operational overhead may not be justified. If the number exceeds $500,000, the direct model pays back its build investment in under 12 months and the partner arrangement is a temporary structure, not a permanent one.
Know the number before you sign the contract. Most SaaS companies don't calculate it until they're already locked in.
Evaluating payments partner options? The leakage calculator can estimate the economics gap between your current or target arrangement and a direct model. Or talk with us before you choose.