The PayFac Model
As defined by the card brands, PayFacsTM (Payment Facilitators) are entities that contract with Worldpay to provide payment processing services to their own merchant clients. Many PayFacs are Software as a Service (SaaS) providers that extend their vertical solution suite by offering payments acceptance and processing as part of their overall package. Other PayFacs operate within a spectrum of horizontal marketplace models.
PayFacs take on an active role in facilitating transactions by providing white-labeled payment processing services that can be integrated into a sub-merchant's overall solution, or as part of the PayFac's own platform as a service. PayFacs facilitate the movement of funds on behalf of their sponsored merchants.
The PayFac has primary liability for the processing accounts of their sponsored merchants. The PayFac will often provide transaction processing support, new account underwriting review, transaction monitoring, merchant invoicing, and other non-processing business services or solutions.
SaaS providers that might fit the model of a PayFac include:
- Shopping cart solutions, such as school lunch and fee programs or government payment services.
- Billing/recurring billing software, such as gym memberships, real estate/rental payments, or association fees.
In addition, some businesses that offer services that are tightly coupled to billing or order fulfillment functions may process as PayFacs.
Am I a PayFac?
To determine whether you are a PayFac, you can ask yourself a few simple questions. See Am I a PayFac? for a more extensive discussion on determining if your company would be considered a payment facilitator.
- Payment facilitation can occur as part of a card present, card not present, or hybrid solution.
- While the majority of PayFacs today operate in a card not present model, the emergence of EMV and mobile point of sale devices have made card present an ever more relevant component of a PayFacs solution.
A key advantage of integrating with Worldpay is that platforms are able to support a variety of card present and card not present processing requirements, as well as specific vertical industry requirements, while also supporting the unique onboarding, portfolio management and reporting requirements of PayFacs.
PayFac Business Complexities
While the transactional aspects of accepting payments are similar to other payment applications from a developer standpoint, the PayFac model adds additional considerations:
Discover what developers need to know about developing applications for PayFac