PayFacs typically provide short-term, flexible agreements with minimal setup fees, making them an attractive option for smaller businesses or those just starting. ISO vs MSP ISOs and MSPs (Member Service Providers) are often discussed together because they’re very similar entities. It obtains this through an acquiring bank, also known as an acquirer. Depending on your processing volumes there are two different types of merchant accounts that you will qualify for, either a PSP and an ISO. In the PayFac model, banks that monitor PayFacs are called Acquiring Banks. A PayFac will function as a payment facilitator in this general sense (though it's important to note the differences outlined above), and you can use a payment gateway to translate data between the PayFac and the credit card providers. When PayFac became a buzzword among software platforms and the many businesses trying to sell to them, the meaning of the word started to blur. This can include card payments, direct debit payments, and online payments. 9. Payfac and ISO models involve much more regulatory and compliance overhead than payfac-alternative models. Referral Partnerships Overall, ISOs work as intermediary “resellers” of payment processors or acquiring banks to merchants, while PayFacs have a single account and absorb greater responsibility for underwriting and risk management. An ISO acts as a middleman, facilitating the relationship between the ISV and the payment processor. One of the reasons for this phenomenon is that many companies (including former independent sales organizations (ISO)) find it more profitable to combine the functions of an online gateway provider and a merchant service provider (MSP). Payment. The Green Sheet :: Breaking News. SaaS. The speed at which a merchant can start processing payments with a PayFac is vastly different than the rate at which this could be done in the legacy ISO model. Our belief remains that all payfacs will inevitably write directly to the networks and avoid the processors for so many reasons. A Payment Facilitator, or PayFac, is a company that provides payment processing services to merchants looking to accept credit and debit cards. Now let’s dig a little more into the details. So how much. This is a critical consideration for businesses that might struggle to afford or set up their own merchant account. The Payments Maturity Curve consists of five stages: Referrals, ISO Relationship, Payment APIs, Managed PayFac, and Stax as a full PayFac. Payfac’s immediate information and approval makes a difference to a merchant. After the vetting process, the PayFac entity adds the sub-merchant to its. For businesses, the difference between using payfac-as-a-service compared to becoming a payfac comes down to time, cost, and risk—in short. responsible for moving the client’s money. And this makes a difference for several reasons, when it comes to the pros and cons of using a ISO/MSP vs. A PayFac works by establishing one master merchant account, which can then be leveraged by multiple businesses for a small fee. (1) Pursue the ISO model: This model is a glamorised version of integrated payments seen in FinTech 1. First popularized by firms like PayPal and Square, the payments facilitator (payfac) model is reshaping the payments ecosystem, allowing nonpayments companies that adopt it to participate more fully in the payments revenue stream. Sub-merchants operating under a PayFac do not have their own MIDs, and all transactions are processed through the facilitator’s master merchant account. One significant difference between PayFacs and ISOs lies in the contracts they offer to merchants. PayFac vs ISO: Weighing Your Payment Options . Our digital solution allows merchants to process payments securely. There isn’t much of a debate in terms of functionality in the larger payment processor vs. It also holds a master merchant account and MID with a sponsoring bank, which means it can acquire aggregate. PayFacs provide a similar service to standard merchant accounts, but with a few important differences. The ASC 606 standard on revenue recognition demands that companies. Payment processors do exactly what the name says. As he noted, among the firms that most commonly move down the PayFac path – ISOs, ISVs and platform businesses – the benefits stand out quite brightly: easier merchant onboarding, better control. A PayFac, or payment facilitator, was originally defined by Visa® and Mastercard® to describe the entity that is officially doing business with the card brands. Checkout’s UK & Europe net revenues in FY2019 were $55M and grew 52% yoy. How do PayFacs differ from ISOs? Setting merchants up with payment processing has traditionally been a job handled by independent sales organizations (ISOs). On. The Payments Maturity Curve consists of five stages: Referrals, ISO Relationship, Payment APIs, Managed PayFac, and Stax as a full PayFac. &. When contracts are signed, the merchant and payment processor are counterparties. In the last few years, the concept of “PayFac-in-a-Box” has emerged as a path for B2B software companies to become registered payment facilitation providers for less time and money than it would take for them to do it on their own. ISOs mostly resell merchant accounts, issued by multiple acquiring banks. This simplifies the onboarding process and enables smaller. In general, if you process less than one million. The payfac model is a framework that allows merchant-facing companies to. While an ISO product will sometimes take weeks to approve a merchant due to the more stringent and quite often paper-based application process, PayFacs are able to. com To make it a little easier, this article compares and breaks down the similarities and differences between two types of payment service providers (or PSPs): PayFacs and ISOs. The customer views the Payfac as their payments provider. Even declined applications must be documented along with. However, other models of merchant and referral services provision still remain relevant. In short, a PayFac or payment facilitator, is a master merchant that supports sub-merchants. Key regulations control the operation of any payment facilitator (payfac). Together, ISOs and ISVs share in the revenue generated from processing fees. This is because the per-transaction payment processing rates are typically better for merchant accounts—as opposed to sub-merchant accounts. Set up merchant management systems such as dashboards,Integrated Payments 1. A Payment Facilitator, or PayFac, is a sub-merchant account used by merchant service providers to provide payment processing services to their own clients, known as sub-merchants. PayFac vs. “We chose to partner with Global Payments Integrated because they took on the burden of handling the EMV® certification and security, including E2E encryption and tokenization, saving us months of internal work. com. PayFac Vs. 1. . This doesn’t happen with ISO, as it never handles money directly. This model is ideal for software providers looking to. Contracts ISOs and PayFacs sign different contracts with their clients. To your customers, the payments experience is seamless and fully integrated with your SaaS platform. Aggregate processing means the funds from transactions are. While both types of merchant account providers can assist you with equipment and services, an ISO will provide you with your own merchant account, whereas a. When contracts are signed, the merchant and payment processor are counterparties. The tool approves or declines the application is real-time. The ISO might be included in the agreement as a third party, but the situation can vary. This means you don’t need to work with multiple vendors. The former, conversely only uses its own merchant ID to process transactions. If you're wondering what the difference is between Payfac and ISO, the answer is simple: The Payfac solution provider is directly responsible to MasterCard and VISA to ensure their Payfacs. A Payment Facilitator, or PayFac, is a company that provides payment processing services to merchants looking to accept credit and debit cards. Gateway Features, Specific to Saas and PayFac Payment Platforms: Payment gateway integration. However, taking on the burden of payments goes much further than development and comes with a number of downsides and risks. The core of their business is selling merchants payment services on behalf of payment processors. ) The PayFac takes on merchants as its own contracted “sub-merchants,” which process their transactions through the master merchant account provided to the. Stripe provides a way for you to whitelabel and embed payments and financial services in your software. The contract is typically between the sponsor and the merchant, but the ISO may sometimes be included in a three-party agreement. • The acquirer has access to Payfac system to oversee their performance and compliance. It is when a business is set up as a primary merchant account and provides payment processing to its sub-merchants. Keywords: merchant acquirer, payment facilitator, payment aggregator, payfac vs iso, payment acquirer vs processorPayfac-as-a-service vs. PayFac Dynamic Payout Daily Operations Guide This document is intended for use by operations and financial professionals to assist with day-to-day monitoring and management of the Worldpay Dynamic Payout funding model. This is especially true for the software companies looking to become a payfac themselves in comparison to simply partnering with an existing payfac or becoming an Independent Sales Organization (ISO). The North American market for integrated. Jan 20, 2022 What is ISO? ISO stands for International Standardization Organization and it is an international body, which has been formed to establish standards in the field of industrial. There are several ways for businesses to go about accepting payments, and two of the most popular provider options are PayFacs and Independent Sales Organizations (ISOs). A PayFac, or payment facilitator, was originally defined by Visa® and Mastercard® to describe the entity that is officially doing business with the card brands. As a result, the revenues, collected by a PayFac, are much larger than the revenues of a traditional ISO. While there are many benefits of integrating to a Payfac, two of the most notable are frictionless onboarding and risk, liability and costs associated. In the grand scheme, ISOs and PayFacs provide merchants with a similar service – access to credit card processing. ) The PayFac takes on merchants as its own contracted “sub-merchants,” which process their transactions through the master merchant account provided to the. What is a payment facilitator? History of payfacs How to bring payments in-house Traditional payfac solutions Getting started Set up payment systems Set up merchant onboarding. The first key difference between North America and Europe is the penetration of ISVs. Take the time to fully understand how PayFac works before committing to. Payment Facilitator. PCI's embrace of mobile PIN is a real game changer | ComputerworldA good customer resource management platform provides advanced merchant reporting and analytics, enabling ISOs/MSPs to maintain a higher level of awareness over each of their merchants’. A payment facilitator (or payfac) is the owner of a master merchant identification number who registers merchants as sub-merchants and enables their payment acceptance. A Payment Facilitator or Payfac is a service provider for merchants. While there are advantages to taking on high risks, such as greater flexibility. ” Unlike in the ISO model, where the ISO resells merchant services as an extension / on behalf of the Acquiring Bank, the PayFac sits distinctly between the Acquiring Bank and. If you’re a SaaS company that wants to offer your customers the ability to pay or get paid via your platform—in other words, an integrated payments provider—you’ll need a payments facilitator. 3. How do you choose between the two? Key Takeaways Payment facilitators (PayFacs) simplify payment processing for small and medium-sized businesses by aggregating multiple merchants under one master account. the PayFac Model. Payfac and payfac-as-a-service are related but distinct concepts. Under umbrella of PayFacs merchants process their transactions. You may also like. PayFac vs. In contrast, a PayFac builds and maintains its payment infrastructure to interact directly with clients and control the user experience. About payment facilitators. What ISOs Do. But now you’ve outgrown them – and that’s a good thing. a Payment Service Provider (PSP), aka a Payment Facilitator (PayFac). The business has gone through the traditional setup of a merchant account in its name and is registered as a Merchant. My payments would be really cheap. . SaaS platform: A software-as-a-service (SaaS) platform is a business that develops and sells cloud-based software via a subscription model. The world of payment processing has its fair share of acronyms, and two of the most popular are PayFac (Payment Facilitator) and ISO (Independent Sales Organization). . leveraging third party vendors. The second type is a more modern, technology-first payfac solution from a commerce provider like Stripe. Determining the optimal model for a platform entails analysis of the benefits, total cost of ownership, and risks. Establish connectivity to the acquirer’s systems Two-way information flow: • Th Payfac pushes messages the acquirer (transaction info). What’s The Difference Between A PayFac vs ISO? Posted at 11:39 am in Fundraising, Payment Processing. Contracts. Recently, the concepts of PayFac and aggregators have started converging. 0. Payfac: What’s the difference? Independent Sales Organization (ISO) is a third-party entity that partners with payment processors or acquiring banks to facilitate merchant services. Now let’s dig a little more into the details. Stripe provides a way for you to whitelabel and embed payments and financial services in your software. To learn more about the differences between these payment models, see our blog: PayFac vs ISO: Weighing Your Payment Options. Payment facilitation helps you monetize. Just as there is no real functional difference between an ISO/MSP, there is not much difference between a Payment Service Provider and a Payment Facilitator. Insights. For customers, a credit card payment seems instantaneous, taking no more than a few seconds. ISO maintains records in a centralized database which makes it easier to audit but PayFac maintains a system that is more flexible in terms of processing, and easily adaptable to the needs of. The Job of ISO is to get merchants connected to the PSP. implementation of a payment facilitator model) calls for getting certified as one by the respective acquirer, and for. PayFacs take care of merchant onboarding and subsequent funding. Partnering with a payfac-as-a-service provider leaves the technical work like coding, compliance monitoring, and payment integration to industry experts. Offering similar services to popular payment processing tools like Stripe and PayPal, PayFac is a third-party merchant service provider. The Road to an Integrated Payments Partnership: Referral Partner, PayFac or ISO? Connecting customers to trustworthy payment options is a win-win for you and your customers. With an integrated payments partnership, you don’t need endless development hours or a huge IT staff to get started. A SaaS or PayFac, usually, needs to dedicate much more considerable effort to integration and certification processes. In their increased bid to boost their embedded finance capabilities, Fintech platform FIS has acquired Payrix, the embedded payment company. Chances are, you won’t be starting with a blank slate. North America is a Mature ISV Market, Europe is Not. Payment Facilitators Fully Explained Credit Card Processing Merchant Services Considering how many small businesses are out there, you might feel overwhelmed by all the competition. These differences can be categorized into three different types. What Are the Main Differences between ISO Models and PayFac Models? Independent sales organization models and PayFacs have many similarities, but their key differences really set them apart. Most businesses that process less than one million euros annually will opt for a PSP. Payment Facilitators offer merchants a wide range of sophisticated online platforms. A payment facilitator, also known as a “payfac” or payment aggregator, is a payment model that has grown tremendously over the past few years. In this article we are going to explain why payment facilitator model is becoming so popular (attracting more and more entities) while ISO model is gradually dying out, vacating the space for new payment facilitators. The PSP in return offers commissions to the ISO. One classic example of a payment facilitator is Square. Besides that, a PayFac also takes an active part in. &. The ISO might be included in the agreement as a third party, but the situation can vary. In a nutshell, the business problem that the PayFac, as an entity, and payments facilitation, as a concept, seeks to solve, and which has existed stretching back decades: Small businesses have. Understanding the differences between an ISO versus a payfac will help you see why using a plug-and-play payfac-as-a-service solution is the most effective payment acceptance choice. A payfac has a much more flexible payment system and a wider variety of payment methods, so much so that it can be carried out through the linked bank account. com. Each of these sub IDs is registered under the PayFac’s master merchant account. The Payment Aggregator can quickly onboard a new merchant (typically a user of the SaaS offering) and they can begin. What SaaS & Ecommerce Companies Need to Know About Payment Facilitator Regulations. However, I also found a good PayFac-as-a-service company. In contrast, PayFacs have one or two processor relationships and onboard ISVs as referral agents. PayFac vs ISO: Weighing Your Payment Options There are several ways for businesses to go about accepting payments, and two of the most popular provider options are PayFacs and Independent Sales Organizations (ISOs). The PayFac uses an underwriting tool to check the features. PayFac vs ISO: When Does One Make Sense over The Other? – Reforming Retail . A potential PayFac has to find an acquiring partner willing to take them on as a reseller. PayFac offers a few discounts and. Payment processors handle the actual processing of transactions between merchants, customers, and financial institutions. PayFac vs ISO: Weighing Your Payment Options There are several ways for businesses to go about accepting payments, and two of the most popular provider options are PayFacs and Independent Sales Organizations (ISOs). What is a PayFac? — Understanding the Differences with ISOs. We promised a payfac podcast so you’re getting a payfac podcast. Sometimes a distinction is made between what are known as retail ISOs and. The submerchants and the PayFac enter into an agreement, and that agreement is not related to the PayFac’s agreement with the payment processing partner. Let’s delve in. There’s not much disclosure on the ‘cost of sales’ (i. The types of new entities an ordinary ISO can turn into include a PayFac, a wholesale. However, PayFac concept is more flexible. Independent sales organizations (ISOs) are a more traditional payment processor. PayFac vs. I SO. PayFac business is high-quality and growing >60%, worth $6/share today and $24/share in 2027. 40/share today and. One classic example of a payment facilitator is Square. Payfacs work by having a master merchant account (and a master MID) through its relationship with acquiring banks. The ISO is an intermediary signing up the merchants for the acquirer’s payment processing services. It provides a technology, allowing to authorize transactions and, potentially, receive transaction settlement information. But for Uber, Shopify, Freshbook and their ilk, which are. In this post, we break down the differences between a few of the most common routes you can take when it comes to integrated payment models: independent sales organization (ISO), full-fledged payment facilitator (PayFac), or PayFac-as-a-Service (PFaaS) models. For example, in an ISO relationship, you’re unable to customize the onboarding experience for your customers, but with managed payment facilitation, you can. Don’t let this be you. With a. PSP and ISO are the two types of merchant accounts. The choice between a PayFac and a payment processor depends on your business needs, industry, and desired level of support. Both offer companies a means of accepting and processing payments, and while they may appear to be the. Our payments experts help you decode the differences. PayFac vs ISO. 2019. The PayFac aggregates transactions and sends them to its processor, keeping operations streamlined. Payfacs work by having a master merchant account (and a master MID) through its relationship with acquiring banks. PayFac platforms offer integration solutions for a wide variety of software types. Becoming a full payfac typically requires an agreement with a sponsoring merchant acquirer such as Worldpay, registering as a payfac with the card networks, becoming compliant with the Payment Card Industry Data Security Standard (PCI DSS. Besides that, a PayFac also takes an active part in the merchant lifecycle. PayFac vs ISO: Weighing Your Payment Options . These banks are also known simply as issuers. Before offering customers payment methods from popular card networks (Visa, Mastercard, etc. You must be logged in to post a comment. becoming a payfac. Square has been one of the most disruptive technology companies in the past decade, yet they recently caught the media’s attention for the wrong reason. Avoid the slow, manual sub-merchant onboarding with other payfac solutions, and offload your payments compliance obligations to Stripe. Both offer ways for businesses to bring payments in-house, but the similarities end there. What is interchange? At a high level, interchange refers to the fees charged by the major card brands and the payment processors. But depending on the size of businesses payment facilitators are working with two scenarios are possible. Business Solutions Merchants & Operators. Failure to do so could leave PayFac liable for penalties. Consequently, the PayFac model keeps gaining popularity. Becoming a payment facilitator is a change to your operational and support models, has and it pays long-term benefits. Whatever works best for them. sitting on top of another payfac. . A Payment Facilitator or Payfac is a service provider for merchants. Independent sales organizations (ISOs) and resellers of merchant services are examples of payment service providers in the industry. Payment facilitation (Payfac) is a service that allows businesses to accept payments from their customers in a variety of ways. Payrix was founded in 2015 and has provided embedded payment solutions to serve SMB. Here are the six differences between ISOs and PayFacs that you must know. There are pros and cons of each phase, and it is typical to approach payments in a “crawl, walk, run” scenario. Book Free Consultation. Global Payments Has Spent At Least $488M on POS Thus Far, And It’s Looking Like A Total DisasterA payment facilitator underwrites the sub-merchants and proceeds to onboard the profile. Payment Facilitator. While all of these options allow you to integrate payment processing and grow your. Registered payment facilitators earn 20-40 basis points more per transaction than they would riding the rails of another wholesale PayFac. In comparison, ISO only allows for cheque payments. ) The PayFac takes on merchants as its own contracted “sub-merchants,” which process their transactions through the master merchant account. A PayFac will smooth the path. Thus, in contrast to an ISO, a PayFac model can consolidate transaction processing volume and unify internal processes. ISO. We ae talking about value-added reseller (VAR), independent software vendor (ISV), and several kinds of ISO modifications. Solicitation activities (ISO) or deployment of ATM, POS or kiosk PIN acceptance devices and/or manage encryption keys (ESO) without touching cardholder data. An ISO (Independent Sales Organization) is similar to a PayFac in a lot of ways. Now that you’ve learned about what a PayFac is, you might want more information. From merchant underwriting, payment acceptance, split fees, white-labeled partner portal, flexible payouts, and risk management. A payment processor serves as the technical arm of a merchant acquirer. What Are the Main Differences between ISO Models and PayFac Models? Independent sales organization models and PayFacs have many similarities, but their key differences really set them apart. The Traditional Merchant Onboarding Process vs. This means that there is no need for any charges between the issuer and the acquirer. However, payment processing can quickly become overwhelming and complicated, often leaving businesses feeling unprepared and doomed to failure. During this process, the PayFac takes on all the risks that merchant payment processors traditionally. The acquirer receives funds from the issuer and pays them into the master merchant account of the PayFac. Payment Processors. In contrast, PayFacs have one or two processor relationships and onboard ISVs as referral agents. Offering similar. 4. Although the exact process for becoming an iso varies depending on the industry, state and partnering. A payment aggregator specializes in small businesses. Calendar Integrations. Though they both operate in the payment processing industry, they have distinct differences that can impact. Typically, the ISO stays out of the contract between the two and instead focuses on the relationship with the payment processor. A payment facilitator is a merchant-service provider that simplifies the payment-collection process for its clients (also called sub-merchants). In the world of payment processing, the turn of the decade represented a massive transition for the industry. I SO An ISO works as the Agent of the PSP. 1. What’s the Difference? Payment Facilitator vs ISO. ) The PayFac takes on merchants as its own contracted “sub-merchants,” which process their transactions through the master merchant account provided to the. Several viable business models can. The Advantages of the PayFac Model. Payment processors handle the actual processing of transactions between merchants, customers, and financial institutions. It is when a business is set up as a primary merchant account and provides payment processing to its sub-merchants. The most important difference between a PayFac and an ISO is that PayFacs “own” their merchants – entering into direct contracts with them (albeit on behalf of an acquiring partner. com. The main difference between payment aggregator and a payment facilitators is that their sub-merchants all have different MIDs in a PayFac. A Payment Facilitator or Payfac is a service provider for merchants. A. Processor relationships. Second, because residuals are earned on. It runs about 40 minutes (really shooting to be less than 30) and we discuss the differences in payfac vs ISO and where payfac is heading. LAC. We want to develop our software and leave the processing and devices to our processing partner—Global. PayFac-as-a-service delivers a competitive payment program with instant onboarding of merchants while creating a seamless customer experience. PayFac vs ISO: When Does One Make Sense over The Other? Jordan Thaeler. The merchants can then register under this merchant account as the sub-merchants. Independent sales organizations (ISOs) are a more traditional payment processor. PayFac vs ISO: When Does One Make Sense over The Other? Add comment. PayFacs take care of merchant onboarding and subsequent funding. Conclusion If you are a prospective merchant, you will witness more and more cases at the market, where in order to work with a specific gateway or software platform, you have to use the merchant account, issued by the acquiring bank this particular gateway/platform supports (is. However, other models of merchant and referral services provision still remain relevant. A PayFac, or payment facilitator, was originally defined by Visa® and Mastercard® to describe the entity that is officially doing business with the card brands. Payfac is a contracted Independent Sales Organisation (ISO), so they have the responsibility to manage their own sales agents and underwriters and adhere to the rules of the card associations. 1. Both aggregators and facilitators offer similar. Onboarding workflow. Stripe and Square are two examples of well-known PayFacs that are incredibly popular with business owners in a wide variety of industries. However, much of their functionality and procedures are very different due to their structure. Overall, ISOs work as intermediary “resellers” of payment processors or acquiring banks to merchants, while PayFacs have a single account and absorb greater responsibility for underwriting and risk management. The ISO might be included in the agreement as a third party, but the situation can vary. . The PayFac does not have to underwrite all merchants upfront — they are instead, underwriting the merchants essentially as they continue to process transactions for them on an ongoing basis. In essence, a PayFac is an agent for a payment processor, but a unique twist to the. Better processing terms and higher revenues. See full list on iriscrm. ISO. PayPal is a classic example of a PayFac, or master merchant serving myriad small sub-merchants. If you're wondering what the difference is between Payfac and ISO, the answer is simple: The Payfac solution provider is directly responsible to MasterCard and VISA to ensure their Payfacs. PayFac: A PayFac, also known as a payment facilitator, is a service provider for merchants who want to accept payments online or physically. How big can Olo really get?At Finix, we're active participants in the payments market and educate whoever wants to get into it with us -- don't miss our PayFac vs ISO write up!… Liked by Jeechee ChenTo become an independent sales operator (iso) selling visa and mastercard credit/debit card processing, you must be an agent of an independent sales organization that is registered as. Payfac and payfac-as-a-service are related but distinct concepts. No more, no less, and are typically a standalone service. See the role each plays in processing credit card transactions. In general, if you process less than one million. An issuing bank is the bank that issued the credit or debit card to the customer. PayFacs work under one or more payment processors, operating in a layer of the industry between processors and merchants. An ISO acts as a middleman, facilitating the relationship between the ISV and the payment processor. The PayFac model allows a single entity to become the “merchant of record” and board sub-merchants with fewer data requirements and scrutiny. PayFacs work under one or more payment processors, operating in a layer of the industry between processors and merchants. Payment facilitators have a registered and approved merchant account with the acquiring bank. Mastercard defines a payment facilitator as a service provider that is registered by an acquirer to facilitate transactions on behalf of submerchants. 3. PayFac vs ISO: When Does One Make Sense over The Other?Payfac-as-a-service vs. PayFacs typically provide short-term, flexible agreements with minimal setup fees, making them an attractive option for smaller businesses or those just starting. ) The PayFac takes on merchants as its own contracted “sub-merchants,” which process their transactions through the master merchant account provided to the. But if you're getting up toward $50M/year in transaction volume you can likely earn more per trnx by becoming your own payfac vs. A payment facilitator is a merchant services business that initiates electronic payment processing. One of the best solutions for businesses is a PayFac. In order to provide a plausible explanation, we need to understand the evolution of the merchant services industry. The best solution will differ for each company. Both offer ways for businesses to bring payments in-house, but the similarities end there. A payment facilitator (PayFac) is a merchant services business that sets up electronic payment and processing services for business owners, so they can accept electronic payments online or in-person. ISO serves as an intermediary between merchants and acquiring banks, taking responsibility for essential functions such as merchant onboarding, sales. Payfac is a contracted Independent Sales Organisation (ISO), so they have the responsibility to manage their own sales agents and underwriters and adhere to the rules of the card associations. The bank receives data and money from the card networks and passes them on to PayFac. When you are listed, you help secure the promise of a trusted payment system by highlighting your investment in data security and the. You own the payment experience and are responsible for building out your sub-merchant’s experience. What’s the Difference? Before payment facilitators began enabling smaller merchants to accept payments, acquiring banks relied on another business model to work. PayFacs work under one or more payment processors, operating in a layer of the industry between processors and merchants. However, taking on the burden of payments goes much further than development and comes with a number of downsides and risks. Under the PayFac model, each client is assigned a sub-merchant ID. But to banks and merchants it means something very different. A Payment Facilitator (PayFac) is a type of merchant services company that provides business owners with a way to accept electronic payments, both online and in-store.