Payment Facilitator (PayFac)

A Payment Facilitator (PayFac) is an entity that simplifies the merchant account enrollment process by functioning as a master merchant processing transactions for its sub-merchants.

PayFacs assume a level of risk and regulatory compliance responsibility, but in return gain the ability to provide a more seamless onboarding experience for their sub-merchants, often allowing them to begin accepting payments in a shorter timescale.

This approach is particularly beneficial for small and medium-sized enterprises (SMEs) and individual entrepreneurs who may not have the resources or expertise to manage the complexities of payment processing.

By leveraging the infrastructure and expertise of a PayFac, these businesses can focus on their core operations while benefiting from the ability to accept electronic payments. PayFacs typically charge a fee for their services, which may be:

  1. a fixed amount.
  2. a percentage of the transaction value.
  3. a combination of both.

It is important for sub-merchants to understand the fee structure and any other associated costs before entering into an agreement with a PayFac. Additionally, sub-merchants should carefully review the terms and conditions of the agreement to ensure they are aware of their rights and responsibilities.