Payment Facilitator (PayFac)

A payment facilitator (payfac) is a company that enables merchants to accept Visa and Mastercard payments through its own merchant account, rather than the merchants having to set up their own merchant accounts with the card networks. The payfac acts as an intermediary between the merchant and the card network, facilitating the processing of card transactions and the settlement of funds to the merchant. Payfacs may work with multiple card networks and can offer merchants the ability to accept a wide range of payment methods, including credit and debit cards, prepaid cards, and contactless payments. Payfacs may be particularly useful for merchants who do not meet the requirements for a traditional merchant account, or who want to simplify the process of accepting card payments.

The requirements for becoming a payment facilitator (payfac) vary depending on the country and the specific payment networks or financial institutions that the payfac will work with. Some general requirements that payfacs may be expected to meet include:

  1. Obtaining a license or registration as a payfac with relevant regulatory authorities.
  2. Establishing a relationship with a acquiring bank or other financial institution that will hold the payfac’s merchant account and process payments on behalf of the payfac’s merchants.
  3. Completing an onboarding process with the payment networks or financial institutions that the payfac will work with, which may include submitting business and personal identification documents, financial statements, and other information.
  4. Meeting security and compliance standards set by the payment networks and financial institutions, including implementing measures such as fraud prevention, data protection, and customer privacy.
  5. Having the technical infrastructure in place to support the processing of payments and the management of merchant accounts. This may include having a website, payment gateway, and merchant portal for merchants to use.
  6. Establishing policies and procedures for handling customer disputes, chargebacks, and other issues that may arise.
  7. Having a customer service plan in place to support merchants and customers.

It is important for payfacs to carefully review the requirements of the payment networks and financial institutions that they wish to work with, as well as any applicable laws and regulations, to ensure that they are able to meet all necessary requirements.

This page was last updated on June 7, 2023.

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