There are a lot of weighty choices that fall on your shoulders as a business owner. And this is a relatively new choice that must be made while taking money. You have the option of using Payfac, joining an aggregator, or going through the extensive process of registering for a merchant account.

That is to say, you can continue using the standard merchant account service offered by an ISO, or you can switch to a different type of account. The alternative is that you’ll switch to the more lucrative sub-merchant account. A payment facilitator account is a type of account used to facilitate payments.

The PayFac Model and Payment Facilitators: What Are They?


A Payment Facilitator, or PayFac Model, is just another name for a sub-merchant account with a merchant bank. It’s a tool for processing payments for the company’s own merchant customers.

Becoming a payments facilitator, or PayFac is the first step toward offering merchant services on a sub-merchant network. As per the words of NMI’s CEO, Roy Banks, in an interview with when a financial institution endorses a Payment Facilitator (PayFac), PayFac’s sub-merchants can be registered under PayFac’s main Merchant Identification Number (MID).

A Digital-Era Model

In the past, software and payment were two entirely distinct processes. However, as a result of developments in technology and patterns of commerce characteristic of the digital era, all of that has altered. Now that we have the means to do so, it is feasible to combine financial transactions with software. This has led to a plethora of fresh movements, such as omnichannel.

EMV and contactless mobile payments are only two examples of how software and payment integration have sparked new markets. As a result of the digital age, there are now prospects for NFC-based loyalty programs and an overall improved consumer experience.

The Role of PayFac


According to Katherine Pensatori, Director of Web Marketing at United Thinkers LLC, a payment facilitator is a relatively new form of intermediate firm that arose as a result of the expansion of the merchant services industry. In contrast to other intermediaries like ISOs, payment facilitators do merchant underwriting, relieving acquirers of this administrative burden.

According to company documentation from Vantiv, the vast majority of PayFacs are SaaS companies that offer payment acceptance and processing as an extension of their vertical solution suite. There is a range of horizontal marketplace models within which other PayFacs function.

Examples of PayFac

Examples of PayFac applications include billing and recurring software and shopping cart systems. Acquirers may be found all over the world because of the widespread adoption of the PayFac processing paradigm developed by MasterCard.

These companies include those already listed as well as others like:

  • Chase Paymentech
  • Payrix
  • ProPay
  • First Data
  • Worldpay
  • Due

The PayFacs Process Explained


A merchant account application requires information on seven or eight crucial areas. The information is analyzed using an underwriting tool. The system makes a real-time decision on approval. When applying to an ISO, on the other hand, you may have to wait up to a week for a response due to the volume of applications. The speed with which a merchant may receive information and authorization from Payfac is invaluable.

Partners and Payment Facilitators in the Payments Ecosystem


The newly established payments ecosystem is facilitated by a payment facilitator who collaborates with a number of important companies. The partners and the roles they perform are listed below.

Acquiring Bank

Merchant accounts are deposit accounts used by payment processors. Those merchant accounts are provided by an acquiring bank. It assumes responsibility for any financial dealings conducted via its payment facilitator clients.

Payment Processors

Authorized transactions are then sent to the relevant card networks by payment processors. The issuing bank of the credit card used in the transaction is also settled. A payment facilitator and a payment processor should connect with one another for optimal performance.


Sponsors act as both acquirers and processors in one convenient package.


Merchants use payment processors to transact with sub-merchants. A merchant account processes financial transactions. This merchant account is owned by the payment processor.

Pros of the PayFac System

Using the PayFac approach comes with a plethora of advantages. We provide rapid onboarding, a fully automated sub-merchant setup and administration system, and a comprehensive Know Your Customer service with detailed reporting. You will be granted access to the financial and bookkeeping records of sub-vendors, along with their individual financial statements and reports on reconciled transactions.

Access to unified platform reports and automatic chargeback import and notification are further advantages.

Faster onboarding is only one of many benefits of the PayFac approach. As a Payment Facilitator, you have the power to set up sub-merchants rapidly, which speeds up new client acquisition since they don’t have to fill out paperwork or present documents in order to set up their account.

There are further benefits, such as the capacity to float a considerably bigger quantity of payments for a longer period of time and a flat charge structure for users. The merchant’s cash flow is improved as a result of this benefit.

The Future of Online Payment Services

Future developments in payment facilitators are worth considering in light of the ongoing development of payment methods.

Currency Exchange


One emerging pattern is an emphasis on creating a frictionless international payment process. However, there are still several obstacles in the way of the global spread of payment facilitators. Without technological and regulatory environment uniformity, frictionless international payment experiences are impossible to achieve.

Constant Government Regulation

Government rules frequently impede the development of the fintech industry, even within the United States. There are still problems with taxation, standards, and data security.

The Future Is Bright

Uber, for example, has expanded to include debit cards and vehicle loan options, whereas Shopify is just Shopify. Increase funding for start-ups and established firms. Offering these possibilities exemplifies the growing need for a wider variety of financial services in the small company sector.

Interested in working as a payment facilitator?


There are many payment processors that we’ve collaborated with. There are dozens, and we only want to send you the finest ones. Get started as a PayFac right now by contacting us.