A payment facilitator, or PayFac, enables sub-merchants to accept payments under a sponsored acquiring arrangement. It manages onboarding and operational responsibilities under agreements with an acquirer and card networks.
How does the model work?
The facilitator onboards sub-merchants, provides payment technology, routes transactions and supports settlement, monitoring and disputes under its program.
PayFac versus independent merchant account
A traditional merchant contracts more directly for an acquiring account. A sub-merchant joins the facilitator’s program, often with faster onboarding but provider-defined controls.
What responsibilities does the PayFac carry?
Responsibilities can include identity checks, underwriting, transaction monitoring, sub-merchant support, reserves, reporting and scheme compliance.
What should a sub-merchant review?
Review settlement timing, reserves, limits, pricing, supported activity, data access, dispute handling and what happens if the account is restricted.
What risks are monitored?
Fraud, chargebacks, prohibited products, sudden volume changes and sub-merchant solvency are common risk areas.
