Why It’s Worth Being a Payment Facilitator

184 views 7:00 am 0 Comments March 11, 2022

eCommerce sites and online transaction are practically everywhere nowadays. More businesses, even those reluctant to adopt online payments, are now looking for online shopping experiences that will appeal to their target market.

Businesses looking to accept credit cards online should consider using a payment facilitator. This is the most cost-effective and viable option. This has made payment facilitators an highly profitable business option.

Are you considering the possibility of starting a payments facilitator business, but aren’t sure? In this article, we will talk about why it makes sense to be a payments facilitator, as well how you can create your own payment facilitator business.

Let us start with a discussion about the payment facilitation process.


A payment facilitator is basically a business that allows others to accept online payments , and especially online debit card payments .

We need to first understand how a business can accept online credit cards payments without the help of a facilitator in order to fully appreciate the importance and benefits of the payment facilitation model.

Traditional model

A business will need to contact an acquiring banks (a bank authorized through credit card networks for credit card transactions) and then apply for a Merchant ID. Or, the business could apply to a merchant obtainr, which is a bank that sponsors this acquiring institution.

This can lead to a long and complicated underwriting process. The acquiring banks will conduct numerous audits in order to ensure the business has the right infrastructure and compliance for processing online transactions.

Even after the lengthy and tedious underwriting process which can take weeks or days, there is no guarantee you will be approved as merchant.

The Model for payment facilitation

This is what the payment facilitation method was designed to address.

This is where the payment facilitator represents a business who has been approved for the acquiring bank’s merchant ID, called Payment Facilitator ID (PFID).

The PFID essentially enables the payment facilitators to combine (i.e. to share) their online payment processing capabilities with other businesses. This allows the payment mediator to accept other businesses under its PFID.


A payment facilitator allows other businesses, the sub-merchants, to accept online payments by aggregating their PFID.

The payment facilitation method offers a practical solution to a real problem. Both the payment facilitator (and the sub-merchants) will see clear benefits.


1. Predictable source

Facilitators businesses generally use a flat rate model. They make revenue on every transaction received from sub-merchants.

Online credit card transactions can typically be charged at 2.5% to the payment facilitator, while payment facilitators can earn 0.5% in profit by charging 3.1% to their sub-merchants.

As payment facilitators, we can generate predictable revenue from predictable transactions. The more you have to transact, the more you’ll make.

2. Lower processing costs, better scalability

A payment facilitator is able to attract as many merchants as they like, so that they can potentially generate large transaction volumes monthly.

The large transaction volume can allow the payment facilitator to negotiate lower transaction costs with the acquiring bank/credit card networks. This will lead to lower operational expenses.

This makes the payment facilitator business highly scalable.

3. You can have greater control over your submerchants

As a payment facilitator, you have the utmost freedom of establishing policies and implementing underwriting/onboarding/monitoring solutions as you see fit. The sub-merchants will not be in direct contact the acquiring bank. Only interacts as the payment facilitator.

This can be a double-edged coin as the payment facilitator will have to assume liability of its sub-merchants. However this will translate into greater control and versatility from start to end.

4. More clients are attracted to a company that provides a better customer experience

By becoming a payment facilitator, the business can provide quality service to its customers.

Because you are the only one the sub-merchant contacts, they won’t need to contact anyone, not even the credit cards issuer and acquiring banking, regarding any problems with the transaction.

This will improve your client experience and allow you more clients to come back.


These are the top benefits of using the payment facilitation method to accept online credit-card payments if your company is currently thinking about it.

1. Accept payments immediately

Without a doubt, the biggest benefit of the PayFac model for sub-merchants is the fast and easy underwriting/onboarding process, so you can start accepting online credit card payments almost immediately.

Typically, all you need is to create an account through the payment facilitator’s site or platform. You’ll also need to go through a simple underwriting procedure and be ready for payments within minutes.

2. Lower risk and potential costs

The payment facilitator takes on all of your obligations in a payment facilitation system. Even though the fees are higher as you need to pay the payment facilitator, you only need to pay once the transaction has been processed. This can make it a more cost-effective option if you have a small transaction volume.

3. Compliance

They will ensure your payment facilitator is PCI compliant. You as a sub-merchant also will comply with relevant regulations.

4. Better Security

The payment facilitator is also responsible to set policies and oversee the prevention of fraudulent activities.

In the event that you are chargedback requested, the payment facilitator will help you submit evidence to credit card networks. This will make it easier and safer for you as a submerchant.


Although becoming payment facilitator can have its challenges it is an exciting opportunity to explore, particularly for those who are already in SaaS.

The use of payment facilitation consulting services can assist you in setting up your infrastructure and increasing your chances to be approved by the banks and credit card network as a payment facilitator.