PayFac Payment Facilitators

The PayFac Model

The digital era has changed the way businesses operate, especially in the realm of payment processing. With the increase in e-commerce, online payments have become more critical than ever before. As a result, the Payment Facilitator (PayFac) model has emerged as an innovative solution for software vendors looking to simplify and streamline payment processing for their clients. This article explores the PayFac model’s benefits, busts some common myths, and provides insights for software vendors looking to integrate this model into their offerings.


What is a Payment Facilitator (PayFac)?

A Payment Facilitator, also known as a PayFac, is an intermediary that bridges the gap between businesses and payment processors. PayFacs act as a master merchant, aggregating multiple sub-merchants or businesses under their umbrella. By doing this, they can offer a seamless, integrated payment solution that simplifies the onboarding process and reduces transaction costs for businesses.


Benefits of the PayFac Model

  1. Streamlined Onboarding: One of the most significant advantages of the PayFac model is the simplified onboarding process for businesses. By leveraging the PayFac’s existing relationship with payment processors, businesses can start accepting payments quickly without the need for lengthy approval processes.
  2. Cost-Effective: PayFacs can negotiate better rates with payment processors due to the aggregated transaction volume of all their sub-merchants. This cost-saving benefit can be passed down to businesses, making the PayFac model more cost-effective than traditional merchant accounts.
  3. Customized Solutions: PayFacs can offer tailored payment solutions to suit the specific needs of businesses. This allows software vendors to integrate payment processing into their existing software seamlessly, providing a more convenient and user-friendly experience for their clients.
  4. Risk Management: PayFacs can provide better risk management and fraud prevention due to their expertise in the payments industry. They can implement robust security measures to protect businesses and their customers from potential fraud.



Myth-Busting PayFac Solutions for Software Vendors

Despite the numerous benefits of the PayFac model, there are some misconceptions surrounding its implementation, which may deter software vendors from considering this solution.


Myth 1: PayFacs Are Only Suitable for Small Businesses

While it is true that the PayFac model is an excellent solution for small businesses due to its cost-effective and streamlined nature, it is not limited to small businesses alone. PayFacs can cater to businesses of varying sizes and industries, providing customized solutions to suit their unique needs.

Myth 2: PayFacs Require Significant Investment

The PayFac model does not necessarily require a substantial upfront investment. Depending on the software vendor’s existing infrastructure, the integration of PayFac services can be relatively seamless and cost-effective. Additionally, partnering with a well-established PayFac can mitigate the need for significant investments in security and compliance measures.

Myth 3: PayFacs Complicate PCI Compliance

Contrary to popular belief, integrating a PayFac solution can actually simplify PCI compliance for software vendors. By partnering with a PayFac that already adheres to PCI compliance standards, software vendors can reduce the burden of maintaining compliance themselves. This allows them to focus on their core competencies while ensuring that their clients’ payments are secure and compliant.



  1. Stripe: Stripe is a popular payment platform that offers payment processing, subscription management, and a suite of tools for businesses to manage their online payments.
  2. Square: Square provides payment processing services and point-of-sale solutions for businesses, including card readers, mobile payment solutions, and e-commerce platforms.
  3. PayPal: PayPal is a global online payment platform that allows users to send and receive payments and supports various currencies. PayPal also offers solutions for businesses, including payment processing, invoicing, and merchant services through its subsidiary, Braintree.
  4. Adyen: Adyen is a global payment platform that offers payment processing services and various tools for businesses to manage their payments, including risk management, fraud prevention, and reporting tools.
  5. Worldpay (now part of FIS): Worldpay was a leading payment processing company that provided payment services for businesses across multiple industries. In 2019, it was acquired by FIS, a financial technology company offering banking, payments, and software solutions.



The PayFac model offers numerous benefits for software vendors looking to provide seamless and cost-effective payment processing solutions for their clients. By understanding the advantages and debunking common myths surrounding the PayFac model, software vendors can make informed decisions and integrate this innovative solution into their offerings to enhance their clients’ overall experience.