What Is a Payment Facilitator

With the advancements in technology and especially high-speed internet, eCommerce websites and online marketplaces are now more popular than ever. Online transactions are now the norm, and more and more businesses are now looking for ways to integrate online payments on their websites and platforms.

Using a payment facilitator service is now one of the most viable ways for businesses to start accepting online payments, making payment facilitator a lucrative business opportunity for SaaS businesses looking to expand their ventures or entrepreneurs looking to start a new business. 

In this guide, we will discuss what a payment facilitator is and all you need to know about the subject. 

What Is a Payment Facilitator?

A payment facilitator (PayFac), as the name suggests, is a company or organization that facilitates other businesses so they can accept online payments. 

There are two main ways a business can accept online payments: 

  • Traditional approach

In this approach, the business/merchant partners up with a payment processor vendor or directly to a credit card acquirer or acquiring bank. The merchant would then need to build its infrastructure for processing payments, onboarding, risk assessments, and more. In a nutshell, in this approach, we build our own platform that can embed card payments into our software. 

Typically this must be done on a country-by-country basis and the process of getting approved by the credit card acquirer until we are finally ready to accept payment can be lengthy and may involve very detailed examinations. 

  • Payment facilitator approach

The second, more modern approach is for the business to partner with a payment facilitator platform. The payment facilitator company has been approved by the credit card acquirer and owns a master account with a card publisher (Visa, MasterCard) or an acquirer, and is licensed to facilitate other businesses as its ‘sub-merchants’.

This way, the business looking to accept online payment wouldn’t need to go through the lengthy underwriting process and so they can quickly enter the market while keeping the initial investment costs low. 

Payment Facilitator Model VS Traditional Processing Model: Key Differences

  • Sub-Merchant’s Responsibilities

In a payment facilitator model, the payment facilitator is the one directly responsible with the bank, and thus the sub-merchants don’t get locked into a contract with the bank directly, as opposed to the traditional processing model. 

The sub-merchants, instead, sign into the PayFac’s policies and regulations. This can provide many benefits for the sub-merchant, while at the same time allowing you—the payment facilitator— more flexibility with managing your sub-merchants as you see fit. 

  • Risk management

Another key difference between the payment facilitator approach and the traditional processing approach is how they handle risk management.

In a payment facilitator model, the credit card acquirer underwrites only the payment facilitator and not the sub-merchants, and so the payment facilitator assumes liability for all financial risk for the sub-merchants. 

This might seem like a disadvantage in starting a payment facilitator business, but at the same time can be a lucrative opportunity since you can charge fees for assuming your client’s liability. 

  • Faster onboarding

One of the key benefits for any business to use the service of a payment facilitator is to eliminate the lengthy underwriting process they’d otherwise need to undergo in a traditional processing model. 

In a payment facilitator model, the sub-merchant only needs to provide a few details and agree to a few policies to the payment facilitator. The payment facilitator, on the other hand, can use an underwriting software/tool to automate this process, so the prospect can either be approved or rejected in just a matter of minutes as opposed to the traditional onboarding process that can take weeks. 

  • Simpler business model

In a payment facilitator model, we can simply charge a simple and transparent flat-rate fee structure without any hidden fees or fluctuating rates. This can provide the payment facilitator a more predictable revenue. 

At the same time, the payment facilitator can easily direct how much money is funded to a sub-merchant and can divert portions to other accounts when necessary. 

How Can We Become a Payment Facilitator?

To become a payment facilitator (PayFac), the business must be approved by a processing bank (i.e. Fiserv) and must sign a direct agreement with this bank. Even then, you are going to be routinely audited to maintain this license. This is where professional payment facilitation services by RPY Innovations can help in: 

1. Getting approved as a payment facilitator

The application process can be quite lengthy involving very detailed audits and examinations. This is where getting the help of a professional consultant with a 100% approval rate can significantly help. In such cases, you can’t get help from banking institutions due to a potential conflict of interest. 

2. Implementing policies and regulations

To be approved as a payment facilitator, the company would need to implement various policies to ensure compliance with the credit card publishers (Visa, MasterCard), as well as other government regulations. A payment consultant can help your business to set up these policies, as well as policies to regulate your sub-merchants to protect your business. 

  • Education and training

Even after you’re approved as a payment facilitator, your business is going to be audited regularly, so it’s necessary to train and educate your team to stay compliant as a payment facilitator. RPY Innovations can help organize regular training for your existing and future team, including familiarizing everyone with payment-related vocabularies to enable your team to communicate effectively as a payment facilitator. 


A payment facilitator enables other businesses to accept online payments by accepting these businesses as sub-merchants under the payment facilitator’s master license. While the process of becoming a payment facilitator does have its challenges, it is a lucrative opportunity to explore especially if you are already in the software business. 

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