The PayFac model powers many modern platforms and marketplaces. For high-risk merchants the trade-off is the same as with aggregators: fast setup, but risk decisions made for the platform rather than for your business.
A payment facilitator is registered with the card networks through a sponsoring bank. It onboards its own sub-merchants, handles their verification and monitoring, and pays out their funds. The sponsoring bank holds the PayFac responsible for every sub-merchant's chargebacks and compliance, which is why PayFacs keep tight limits on the industries they accept.
Common questions
- What is a PayFac?
- PayFac is short for payment facilitator: a company that signs up businesses as sub-merchants under its own master merchant account, so they can accept cards quickly without opening an individual merchant account.
- What is the difference between a payment facilitator and an ISO?
- A payment facilitator puts businesses under its own master account and takes on their risk. An ISO (independent sales organization) refers businesses to a bank or processor, and each business gets its own merchant account.
- Should a high-risk business use a payment facilitator?
- Usually not as the main option. Most payment facilitators restrict or exclude high-risk categories, and a sub-merchant can be paused or removed quickly. A dedicated high-risk merchant account is built to be more stable.