What does it take to become a PayFac?

What does it take to become a PayFac?

• Step 1: Register with an Acquiring Bank.
• Step 2: Choose your Payment Gateway.
• Step 3: Obtain your PCI DSS Certification.
• Step 4: Buy or Build your Merchant Management Systems.
• Step 5: Write and Implement your Underwriting and Compliance Policies.
• Step 6: Pay your Registration Fees.

What does a PayFac do?

A Payment Facilitator or Payfac is a service provider for merchants. When you want to accept payments online, you will need a merchant account from a Payfac. They are then able to sign-up merchants underneath their master account as sub-merchants, thus expediting the process.

Is Uber a PayFac?

PayFac is based on the merchant aggregator model created by Visa/MasterCard to provide support for payment card acceptance in a marketplace environment. Uber and Lyft, Etsy, and Airbnb, to name a few, have also established marketplaces where customers can use cards as a form of payment.

What is a PayFac model?

A Payment Facilitator, PayFac for short, is simply a sub-merchant account for a merchant service provider. It’s used to provide payment processing services to their own merchant clients. “A payments facilitator (or PayFac) allows anyone who wants to offer merchant services on a sub-merchant platform.

Is Amazon a PayFac?

Amazon is another large PayFac that doubles as a merchant of record. But, unlike PayPal, Amazon makes itself the merchant of record no matter the size of the sub-merchant. The companies provide infrastructure for merchants but are transparent to buyers — buyers only see the merchant’s name and never that of the PayFac.

What is the difference between a PayFac and ISO?

Merchants apply directly to PayFacs, making the PayFac responsible for the entire application and onboarding process, in contrast to ISOs, who generally pass merchant information on through their processing partners’ boarding portals and are hands-off from there.

How does a PayFac make money?

As a Payment Facilitator, you can make revenue on each transaction one of your customers makes. As a Payment Facilitator, you underwrite your customers/sub-merchants and charge them for using your payment services. You likely would need to charge 3\% + a fixed fee in order to make money on each transaction.

Is ETSY a PayFac?

Using the example of Uber and online market Etsy, Rich explained that it is Etsy that is a payfac, while Uber is a marketplace. The difference is that consumers who buy from crafts creators on Etsy deal with the seller, with Etsy facilitating payment.

Is stripe a Payfac?

For example, Square, Stripe, and Paypal are all examples of payment facilitators. These common types of acquirers often provide payment gateways for a small fee off of every transaction processed on an ongoing basis.

How do merchant acquirers make money?

Another way to understand the world of payments is by “following the money”, so how do acquiring banks make their money? The acquiring bank typically charges the Merchant Services Provider a small licensing fee that is passed through to the merchant (you), and that’s usually blended in with the merchant pricing.

Is Square a PayFac?

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. In essence, PayFacs are third-party merchant services providers, not unlike popular processing platforms PayPal and Square.

What are the benefits of the payfac model?

There is a long list of benefits to enjoy when using the PayFac model. There is instant onboarding, automated sub-merchant creation and management, and KYC service and reporting capability. You’ll also be able to access sub-merchant accounting and billing, sub-merchant statements, and reconciliation reporting.

Does payfac have to underwrite merchants upfront?

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.” It used to be] that software and payments were completely separate.

What are some examples of payfac products?

PayFac examples include shopping cart solutions and billing/recurring software. Since PayFac is a MasterCard processing model, it’s called Payment Service Provider for Visa, there are plenty of acquirers around the world. These include the aforementioned companies and those like Payrix, Chase Paymentech, Worldpay, First Data, ProPay, and Due.

What is the difference between payfac and an ISO?

Payfac’s immediate information and approval makes a difference to a merchant. Also, unlike an ISO, the PayFac provides the processing services, settlement of funds, and billing to the merchant.