What is a payment facilitator? How PayFacs let businesses take cards in minutes
By SendPay Business · · 2 min read
A payment facilitator, or PayFac, is a company that lets other businesses take card payments under its own master account with a card acquirer. Each business becomes a sub-merchant, so it can start taking payments in minutes instead of applying for its own merchant account. Stripe and Square are well-known examples of the model.
How it differs from a merchant account
- Merchant account: each business applies to an acquirer directly, with checks that can take days or weeks.
- PayFac: the business signs up with the PayFac, which runs the checks and adds it as a sub-merchant, often the same day.
What the PayFac takes on
The PayFac is responsible to the acquirer for its sub-merchants: checking who they are, watching for fraud and covering losses such as chargebacks a sub-merchant can't pay. That's why PayFacs sometimes hold back funds or close accounts quickly.
Should a platform become one?
Software platforms and marketplaces sometimes become PayFacs to earn more from their customers' payments. It brings extra risk, compliance and cost, so most start by working with an existing PayFac or payments partner and only take the step once their payment volume is large.
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Build my platform →Questions people ask
What is a payment service provider?
A firm that lets businesses take payments. Many PSPs work as PayFacs.
What is a PSP? →What is a merchant account?
The comparison guide explains gateways and merchant accounts.
Payment gateway vs merchant account →How do marketplaces pay sellers?
The marketplace payouts guide covers splitting and paying out.
Marketplace payouts →Read next
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.