Payment Facilitator vs Payment Processor

In the Payments World, there are many terms that can be confusing and new. One of the most important concepts to understand is the difference between a Payment Facilitator and a Payment Processor.

What is a Payment Facilitator?

A Payment Facilitator(PayFac) is a service provider for merchants who want to accept payments online or physically.

A Payment Facilitator provides merchant accounts relatively quickly to businesses or individuals who want to process credit cards. Payment Facilitators are able to quickly onboard merchants because they are onboarded as sub-merchants of the PayFac, not the Payment Processor.

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Graphic from Pyments.com explaining the PayFac Model

The alternative is to partner with a Payment Processor but that process can be complicated and may take weeks before being underwritten for a merchant account.

Examples of Payment Facilitators (PayFacs)

  1. Stripe
  2. Adyen
  3. PayPal
  4. Square

The main benefit in choosing to use the services of a Payment Facilitator is the simplicity and speed at which you can be underwritten.

What is a Payment Processor?

A Payment Processor connects you directly to the acquiring bank directly with an individual merchant account. When you are handling large volumes, a direct relationship with a payment processor can provide lower fees and a single gateway for multiple payment methods.

Examples of Payment Processors

  1. WorldPay (Vantiv eComm)
  2. WorldPay (Vantiv Core)
  3. Elavon
  4. First Data
  5. Chase Paymentech
  6. TSYS

The main benefit in partnering with a Payment Processor instead of a Payment Facilitator is the lower fees they can charge.

Which One Should I Choose?

When searching for a solution to process credit cards, selecting a Payment Facilitator is usually the right answer. While you may pay higher fees, they typically can approve you very quickly and the experience from the start to finish can be seamless.

However, if you are a high volume merchant, partnering with a payment processor may save you significant fees. You should budget for a longer approval time and maybe some integration work into your existing system. There is an entire industry called ISOs that can help you navigate this process.

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