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If you have ever signed up for a payment service and taken your first card payment the same day, you probably used a payment facilitator, or PayFac. The model has made card acceptance far more accessible. It also comes with trade-offs worth understanding before you build your business on it.
The short definition
A payment facilitator is a company that holds one master merchant account with an acquiring bank and boards many smaller businesses underneath it as "sub-merchants". Instead of each business going through full underwriting, the PayFac signs them up quickly and takes responsibility for monitoring them.
How it works
- The PayFac is approved by an acquiring bank and registered with the card networks.
- Businesses sign up as sub-merchants, usually with a short online form and basic identity checks.
- Payments flow through the PayFac's master account, which then pays out each sub-merchant.
- The PayFac monitors activity and is responsible to the acquirer for fraud and chargebacks across all its sub-merchants.
Benefits of the PayFac model
- Speed. Many businesses can start accepting payments within minutes or hours.
- Simplicity. One provider handles the account, the software and the payouts.
- Simple pricing. Often a single flat rate per transaction.
- Built into software. Many platforms, booking tools and marketplaces embed payments this way.
The trade-offs
Less up-front review means more review later
Because sign-up is fast, a lot of the real risk review happens after you start processing. If your sales, refunds or industry trigger the PayFac's risk systems, payouts can be held or the account closed, sometimes with little notice.
Restricted industries
PayFacs carry the risk for everyone on their master account, so most restrict or prohibit high-risk industries. A business in a restricted category may be approved at sign-up and shut down later.
Pricing at scale
Flat rates are convenient for small volumes. As you grow, interchange-plus pricing on a dedicated merchant account often costs less.
Less flexibility
You generally accept the PayFac's standard terms, payout schedule and tools rather than terms set for your business.
PayFac vs. dedicated merchant account
| PayFac (sub-merchant) | Dedicated merchant account | |
|---|---|---|
| Setup time | Minutes to hours | Days, after underwriting |
| Underwriting | Light at sign-up, ongoing monitoring | Full review up front |
| High-risk industries | Often restricted | Possible with the right provider |
| Pricing | Usually flat rate | Often interchange-plus, set for you |
| Stability | Can change quickly if risk flags appear | Terms agreed in advance |
Which is right for you?
A PayFac is a sensible starting point for a small, low-risk business that wants to start today. A dedicated merchant account tends to suit businesses that are growing, process larger volumes, operate in high-risk industries, or simply want the stability of terms agreed up front.
Zeyla reviews every business before opening an account, including businesses in high-risk industries. Applying is free and takes about 3 minutes, and a payments specialist reviews every application. Start your application.
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