What is a payment facilitator?
A payment facilitator, or PayFac, is a company which enables businesses to accept payments without setting up their own dedicated merchant account. It aggregates multiple merchants under one master account.
How does a PayFac operate?
The PayFac handles onboarding, compliance, and transaction processing for sub merchants. It processes payments on their behalf and then distributes funds to them.
Why do businesses use payment facilitators?
They provide faster onboarding, simpler setup, and reduced administrative burden compared to traditional acquiring relationships.
What are examples of payment facilitators?
Examples include Stripe, Square, and PayPal in many of their offerings.
What are the trade-offs of using a PayFac?
Merchants gain convenience but have less control over pricing, risk decisions, and account stability, as the PayFac manages these centrally.