To learn more about the differences between these payment models, see our blog: PayFac vs ISO: Weighing Your Payment Options. ) The PayFac takes on merchants as its own contracted “sub-merchants,” which process their transactions through the master merchant account. A PayFac works by establishing one master merchant account, which can then be leveraged by multiple businesses for a small fee. Recently, the concepts of PayFac and aggregators have started converging. For example, in an ISO relationship, you’re unable to customize the onboarding experience for your customers, but with managed payment facilitation, you can. They typically work with a variety of acquiring banks, using those relationships to "resell" merchant accounts to merchants. • The acquirer has access to Payfac system to oversee their performance and compliance. ISO vs. 2. At the same time, more companies are implementing PayFac model and establishing PayFac payment gateway partnerships. PayFac, which is short for Payment Facilitation, is still a relatively new concept. Payment Facilitator (PayFac) vs Payment Aggregator. Blog. For example, an. They’ll listen to you and guide you in developing the solutions your customers want and need. However, the setup process might be complex and time consuming. PSPs facilitate payments and act as a proverbial middleman between you and the merchant. Payfac is a contracted Independent Sales Organisation (ISO), so they have the responsibility to manage their own sales agents and underwriters and adhere to the rules of the card associations. However, the setup process might be complex and time consuming. The second type is a more modern, technology-first payfac solution from a commerce provider like Stripe. Indeed, PayFac model is a beneficial solution for merchants, acquirers, and, of course, payment facilitators themselves. ISO, so you can choose one of the two, or you’re looking for a PayFac solution for your business. The arrangement made life easier for merchants, acquirers, and PayFacs alike. Maybe you want to learn about PayFac vs. Payment Processors and ISOs have a symbiotic relationship, with each party benefiting from the collaboration. One classic example of a payment facilitator is Square. Also, unlike an ISO, the PayFac provides the processing services, settlement of funds, and billing to the merchant. What is a Payment Facilitator (Payfac)? Payfacs are an evolution of a long-established distribution model in the payments industry. The terms aren’t quite directly comparable or opposable. It is when a business is set up as a primary merchant account and provides payment processing to its sub-merchants. Also, unlike an ISO, the PayFac provides the processing services, settlement of funds, and billing to the merchant. By setting up its own merchant account via an ISO, the retailer can negotiate specific terms and rates, potentially saving money in the long run. In order to understand how. Wide range of functions. You own the payment experience and are responsible for building out your sub-merchant’s experience. In 2021, global payment facilitators processed over $500 billion in transactions – a 75% increase over the previous year. While both types of merchant account providers can assist you with equipment and services, an ISO will provide you with your own merchant account, whereas a. responsible for moving the client’s money. ISVs create software for companies in the payments industry. In the world of payment processing, the turn of the decade represented a massive transition for the industry. Software companies that focus on specific verticals, such as healthcare or childcare, are natural PayFac candidates. The terms aren’t quite directly comparable or opposable. 0. ISO does not send the payments to the merchant. By setting up its own merchant account via an ISO, the retailer can negotiate specific terms and rates, potentially saving money in the long run. Payfacs are registered independent sales organizations (ISOs) that have been sponsored by an acquiring bank. It’s where the funds land after a completed transaction. THIRD PARTY AGENT An entity that provides payment related services on behalf of a Visa Client. Orange California Equipment Maintenance Agreement with an Independent Sales Organization. For example, an. PayFacs vs ISOs. 9% and 30 cents the potential margin is about 1% and 24 cents. And this is, probably, the main difference between an ISV and a PayFac. PayFac-as-a-service delivers a competitive payment program with instant onboarding of merchants while creating a seamless customer experience. Payfac: What’s the difference? Independent Sales Organization (ISO) is a third-party entity that partners with payment processors or acquiring banks to facilitate merchant services. As he noted, among the firms that most commonly move down the PayFac path – ISOs, ISVs and platform businesses – the benefits stand out quite brightly: easier. Payfac: A payfac operates under a master merchant account, and creates subaccounts for each business it services. Payment facilitation helps. Also take a look at some of the primary regulations payfacs face, such as those from the Financial Crimes Enforcement Network, Office of Foreign Assets Control, and USA PATRIOT Act. Owners of many software platforms face the need to embed. 70. During Jim's tenure with NPC and Vantiv, he also drove the development of and relationship with several key NPC ISOs, as well as oversight and management of specific. (ISO). For example, an artisan. However, the setup process might be complex and time consuming. In the scenario of a SaaS company operating as a PayFac, you are the master merchant and your customers are the sub-merchants. You own the payment experience and are responsible for building out your sub-merchant’s experience. So naturally, any company considering the option needs to make sure the investment they’ll make in the Payfac model makes sense financially. Becoming a payment facilitator is a change to your operational and support models, has and it pays long-term benefits. Payment facilitator model allowed all categories of entities to benefit: merchants received fast and smooth underwriting, acquirers could save resources and service larger numbers of merchants. In exchange for the user fees, PayFac underwrites these new merchants and assumes the risk of any payments made through its platform. Registering as a payment facilitator (PayFac) or independent sales organization (ISO) have become popular options for SaaS companies looking for a comprehensive payment strategy. The ISO acts as an intermediary between the merchant and the payment processor, taking care of merchant recruitment, sales, and ongoing merchant support, while the processor handles transactions behind the scenes. Now let’s dig a little more into the details. 00 Retains: $1. Payfac-as-a-service is a turn-key payment facilitation model in which an external company provides businesses with the necessary tools and infrastructure to accept electronic payments, such as credit and debit cards, ACH, and echecks. Payment facilitation, or “payfac,” continues to grow in popularity among software providers and is designed to facilitate payment card acceptance without requiring individual merchants to go through the lengthy process of establishing traditional merchant accounts. This can include card payments, direct debit payments, and online payments. becoming a payfac. As a seasoned global executive with strategic leadership experience across banking, #. You may also like. Some stay where they are (like, again, Uber or Amazon), while others decide to implement the PayFac model. Payment facilitation (Payfac) is a service that allows businesses to accept payments from their customers in a variety of ways. By setting up its own merchant account via an ISO, the retailer can negotiate specific terms and rates, potentially saving money in the long run. Before outlining the similarities and commonalities of ISOs and ISVs, it’s helpful to recap their key differences: ISOs sell payment solutions to merchants, with wholesale ISOs offering additional services such as customer support. They provide services that allow software platforms to accept credit and debit card payments and make it easier and faster for them to start accepting payments as they handle most of the work for you. Onboarding workflow. However, the setup process might be complex and time consuming. This was an increase of 19% over 2020,. Becoming a Payment Aggregator. A. 3. Esto nos lleva a los ISO. A payfac is a type of payment aggregator, but it typically provides a more comprehensive suite of services. Click to read more about what an ISO has both what it has to do for payment processing! Services. GETTRX’s Zero and Flat Rate packages offer transparent billing, competitive rates, and industry-leading customer service, making them ideal choices for businesses seeking a seamless payment experience. Gateway Service Provider. Instead of each individual business needing to set up its own merchant account, a process that can be time-consuming, the payfac effectively “rents out” merchant account functionality under its. Swipesum data all you need in know about Payfac vs ISO. An ISO (Independent Sales Organization) is similar to a PayFac in a lot of ways. PayFac is more flexible in terms of providing a choice to. PayFac vs. They offer merchants a variety of services, including. An ISO or acquirer processes payments on behalf of its clients that are call merchants. Each of these sub IDs is registered under the PayFac’s master merchant account. Becoming a payment facilitator is a change to your operational and support models, has and it pays long-term benefits. To help us insure we adhere to various. Once a sub-merchant has been through the onboarding process it is down to the PayFac to control payments adhering to the rules. PayFacs perform a wider range of tasks than ISOs. While an ISO product will sometimes take weeks to approve a merchant due to the more stringent and quite often paper-based application process, PayFacs are able to. Sub-merchants sign an agreement with the PayFac for payment. The PayFac model has gained popularity in recent years, as it allows businesses to simplify their payment processing and reduce costs, while also providing a better customer experience. Payfac: A payfac operates under a master merchant account, and creates subaccounts for each business it services. The merchant interacts directly with the ISO and follows their set processes to register and become. They are agents of the banks and therefore only. a merchant to a bank, a PayFac owns the full client experience. For example, an. While we’ll discuss costs below, PayFacs can onboard merchants much more quickly than a traditional ISO model. There are several ways for businesses to go about accepting payments, and two of the most popular provider options are PayFacs and Independent Sales Organizations (ISOs). As small business grows, MOR model might become too restraining, while payment facilitators provide robust APIs, which sometimes allow merchants to customize each function separately, according to their. The submerchants and the PayFac enter into an agreement, and that agreement is not related to the PayFac’s agreement with the payment processing partner. This simplifies the onboarding process and enables smaller. To know that your payfac relationship is completely above-board, first know what a payment facilitator is and the issues related to money transmission. However, much of their functionality and procedures are very different due to their structure. Research firm Statista estimates payfac transaction volume totaled $88 billion last year,. The ISVs that look at the long. In addition to serving as Payroc ’ s SVP Payfac Trusty,. 4. In fact, when a merchant is seen as potentially liable for fraudulent activity, an ISO and/or processor are sometimes named as codefendants, along with people at the ISO or processor who. Cutting-edge payment technology: Extensive. This is because PayFacs or master merchants must have a market or domestic entity wherever they are providing. By setting up its own merchant account via an ISO, the retailer can negotiate specific terms and rates, potentially saving money in the long run. Contracts. Just to clarify the PayFac vs. So, what. Checkout’s UK & Europe net revenues in FY2019 were $55M and grew 52% yoy. Payfac: A payfac operates under a master merchant account, and creates subaccounts for each business it services. PayFac vs. Now that you’ve learned about what a PayFac is, you might want more information. A payfac has a much more flexible payment system and a wider variety of payment methods, so much so that it can be carried out through the linked bank account. Stripe’s payfac solution. However, the setup process might be complex and time consuming. A payment facilitator (or payfac) is the owner of a master merchant identification number who registers merchants as sub-merchants and enables their payment acceptance. ISO are important for your business’s payment processing needs. India’s leading payment gateway: Working with a full-service payment services provider,. With companies like Stripe, Square and PayPal pioneering the payment facilitator or “PayFac” model, the era of Integrated Payments 2. Payment processors do exactly what the name says. A guide to marketplace payments. You own the payment experience and are responsible for building out your sub-merchant’s experience. One classic example of a payment facilitator is Square. Classical payment aggregator model is more suitable when the merchant in question is either an. By setting up its own merchant account via an ISO, the retailer can negotiate specific terms and rates, potentially saving money in the long run. When you start accepting payments online, you need a merchant account from a payment facilitator with sufficient infrastructure and proper compliance to process payments . Our belief remains that all payfacs will inevitably write directly to the networks and avoid the processors for so many reasons. , Concord, California (“Wells”). They provide services that allow software platforms to accept credit and debit card payments and make it easier and faster for them to start accepting payments as they handle most of the work for you. A PayFac provides credit card processing services to merchants on behalf of a bank or other. PayFac vs ISO: Weighing Your Payment Options . A payment facilitator is a merchant services business that initiates electronic payment processing. The tool approves or declines the application is real-time. 007 per transacation. ISOs sold merchant accounts to applicants on behalf of different acquiring banks and were integrated with multiple payment gateways, that were connected to specific acquirers and processors. In contrast, PayFacs have one or two processor relationships and onboard ISVs as referral agents. Without ISOs, a relatively small handful of global and regional payment processors would each be forced to interact with. ISOs are an exceptionally important part of the payments ecosystem, serving a critical role that supports both their processing partners and their merchants. In banking and payments, ISO stands for Swipesum get all to need to see about Payfac. Payment Facilitator (PFAC, PayFac, PF): A merchant service provider who can facilitate transactions and simplify the merchant account enrollment process on behalf of the sub-merchant. ISOs rely mainly on residuals, a percentage of each merchant transaction. ISO vs PayFac: What’s the difference? An ISO is a third-party company that refers merchants to acquiring banks or payment service providers. Both offer ways for businesses to bring payments in-house, but the similarities end there. e. Both offer companies a means of accepting and processing payments, and while they may appear to be the same, they are. They are typically small businesses that work with a limited number of banks. Moreover, in a sense, PayFac model relieved acquirers from merchant management functions, which they delegated to PayFacs. (GETTRX) is a registered ISO/MSP/PSP for. Merchants need to understand these differences, so they can decide which of these options may be better suited for their business. The PayFac aggregates transactions and sends them to its processor, keeping operations streamlined. By setting up its own merchant account via an ISO, the retailer can negotiate specific terms and rates, potentially saving money in the long run. Very few PayFac as Service providers publish pricing to sub PayFac’s and there is a reason. 1. But of course, there is also cost involved. Standard. The PSP in return offers commissions to the ISO. In Part 2, experts . Software companies that focus on specific verticals, such as healthcare or childcare, are natural PayFac candidates. What is a merchant of record? Read article. By setting up its own merchant account via an ISO, the retailer can negotiate specific terms and rates, potentially saving money in the long run. Now let’s dig a little more into the details. In this article we are going to explain why payment facilitator model is becoming so popular (attracting more and more entities) while ISO model is gradually dying out, vacating the space for new payment facilitators. Aug 10, 2023. 0 began. The new PIN on Glass technology, on the other hand, is becoming more widely available. A PayFac, or payment facilitator, was originally defined by Visa® and Mastercard® to describe the entity that is officially doing business with the card brands. Acquiring banks willingly delegated them to payment facilitators in exchange for part of liabilities and residual revenues. You see. ISOs never directly touch a merchant’s money as the money will flow directly from the payment processor to the merchant’s merchant. Without ISOs, a relatively small handful of global and regional payment processors would each be forced to interact with thousands. Learn more: PayFac vs ISO: which one to choose for your business? Benefits of becoming a PayFac. However, much of their functionality and procedures are very different due to their structure. Payment facilitators, aka PayFacs, are essentially mini payment processors. ISO serves as an intermediary between merchants and acquiring banks, taking responsibility for essential functions such as merchant onboarding, sales. The differences are subtle, but important. Mastercard PayFac Models: The Ins and Outs of the “Big Two” Payment Facilitator Programs. It needs to obtain a merchant account, and it must be sponsored into the card networks by a bank. Think off ISOs as official service providers on behalf of the cardmember. All in all, the payment facilitator has the master merchant account (MID). Click here to learn more. Below we break down the key benefits of the PayFac model for software. At Payline, we’re experts when it comes to payment processing solutions. Generally speaking, you will. The enabler is essentially an acquirer in the traditional term. Payfac as a Service providers differ from traditional Payfacs in that. Smaller. 00 Retains: $1. Aug 10, 2023. As a PayFac, Segpay handles the sub-merchant onboarding and provides a fully managed payment processing solution. Payfac = a software product, platform, or marketplace that has in integrated payments into its product, and is responsible for the risk of transactions processed by its customers. If your rev share is 60% you can calculate potential income. Payfac’s immediate information and approval makes a difference to a merchant. What is a payment facilitator? A payment facilitator, also known as a “payfac” or payment aggregator, is a payment model that has grown tremendously over the past few years. Both aggregators and facilitators offer similar benefits from the perspective of the end-user. Payfac: A payfac operates under a master merchant account and creates subaccounts for each business it services. Supports multiple sales channels. ISOs. 00 Payment processor/ merchant acquirer Receives: $98. Once you’ve been authorized as a payment facilitator, the ongoing costs continue often exceeding $100,000 a year. Estimated costs depend on average sale amount and type of card usage. ISO, so you can choose one of the two, or you’re looking for a PayFac solution for your business. Stripe provides a way for you to whitelabel and embed payments and financial services in your software. But to financial and merchants it means something high different. You see. It also must be able to. The ISVs that look at the long. Whatever information you need, we can help. For their part, FIS reported net earnings of $4. Massive technological leaps have made it easier than ever for software providers to explore new opportunities and expand their offering, such as becoming a PayFac as a service. However, the setup process might be complex and time consuming. Now let’s dig a little more into the details. ISOs never directly touch a merchant’s money as the money will flow directly from the payment processor to the merchant’s merchant. Independent sales organizations (ISOs) are a more traditional payment processor. But to banks and merchants it. Independent sales organizations (ISOs) and payment facilitators (PayFacs) both act as intermediaries between merchants and payment processors, making them parallel channels in the overall payments ecosystem. Payfac is the abbreviated term often used in the payments industry to describe a company that provides payment processing services to. And this makes a difference for several reasons, when it comes to the pros and cons of using a ISO/MSP vs. With the payment facilitator or PayFac model, every user gets a sub-merchant ID. B2B. Payment facilitators (PFs) were created to make a more streamlined path to electronic payment acceptance for small and medium-sized businesses. April 12, 2021. ”. Learning the meaning of the following terms will help you evaluate PayFac-as-a-Service providers and choose the one best suited to your needs. Each client is the merchant of record for transactions. In other words, processors handle the technical side of the merchant services, including movement of funds. Software users can begin. 20 (Processing fee: $0. They provide the systems and technology that process transactions. The Visa® merchant aggregation model covers all commerce types, including the face-to-face and e-commerce environments, and helps to increase electronic payment acceptance for merchantsThe differences of PayFac vs. In this model, the issuer (having the relationship with the cardholder) and the acquirer (having the relationship with the Merchant) is the same entity. Even though PayFacs and ISOs may seem to be quite similar on the surface, there are a few key differences between them. On. ISO vs. 1. A payment facilitator or payfac is a service provider that affords small and medium-sized merchants the means to process debit or credit card payments more quickly, efficiently, and securely, allowing them more room to focus on their core business objectives. However, the setup process might be complex and time consuming. What’s the Difference? Before payment facilitators began enabling smaller merchants to accept payments, acquiring banks relied on another. Blog. But for this purpose, it needs to build a strong relationship with an acquirer that will underwrite it as a PayFac. becoming a payfac. For some ISOs and ISVs, a PayFac is the best path forward, but. While the. One is an ISO or independent sales organization, and another is a PayFac or payment facilitator. Most important among those differences, PayFacs don’t issue. The Visa Global Registry of Service Providers is the payment industry's designated source for information on registered and compliant agents that provide payment-related services to Visa clients and merchants. 2. Often, ISVs will operate as ISOs. In short, Payment Facilitation is an operating model that affects the acquiring side of the payment ecosystem. For example, in an ISO relationship, you’re unable to customize the onboarding experience for your customers, but with managed payment facilitation, you can. Traditionally, a business that wanted to accept card payments would need to set up a merchant account with a bank, which can be a complex and time. A payment processor is a company that works with a merchant to facilitate. PayFac vs ISO: which one to choose for your business? Read article. 3. Even within the payments industry, ISOs and the role they play are. Payment Facilitator vs Payment Processor. However, the setup process might be complex and time consuming. Through our payment facilitation platform, Treati we're able to provide a full-stack payments API for B2B companies structured in a one-to-many model. The main difference between payment aggregator and a payment facilitators is that their sub-merchants all have different MIDs in a PayFac. When you are listed, you help secure the promise of a trusted payment system by highlighting your investment in data security and the. The acquirer receives funds from the issuer and pays them into the master merchant account of the PayFac. 1 comment. Both offer companies a means of accepting and processing payments, and while they may appear to be the. The Visa® merchant aggregation model covers all commerce types, including the face-to-face and e-commerce environments, and helps to increase electronic payment acceptance for merchants The differences of PayFac vs. next-level service: 24/7, every day of the year. However, the setup process might be complex and time consuming. An ISO (Independent Sales Organization) is similar to a PayFac in a lot of ways. However, the setup process might be complex and time consuming. Fast, efficient boarding solutions that orchestrate third-party and internal systems to help you turn prospects to customers – face-to-face, on the phone, or online. The PayFac, he said, has emerged, and evolved from its 1990s underpinnings where merchant acquirers had handled that merchant enrollment, boarding, underwriting and even settlement. 1. The second type is a more modern, technology-first payfac solution from a commerce provider like Stripe. What is an ISO vs PayFac? Independent sales organizations (ISOs) and payment facilitators (PayFacs) play important intermediary roles in the payments ecosystem. payment processor question, in case anyone is wondering. An ISO, or independent sales organization, is a company that resells payment services to merchants on behalf of a payment processor or acquiring bank. When you want to accept payments online, you will need a merchant account from a Payfac. Risk management. Acquirer = a payments company that. However, the setup process might be complex and time consuming. Our team has over 30 years experience. So how much. “So, your policies and procedures have to guide how you are going to. Payment Facilitation as a Service, also known as PayFac as a Service or PFaaS, allows software platforms and SaaS providers the ability to act as a merchant account for their end users. By setting up its own merchant account via an ISO, the retailer can negotiate specific terms and rates, potentially saving money in the long run. However, the setup process might be complex and time consuming. PayFac vs ISO: When Does One Make Sense over The Other?In this article, you'll get an in-depth analysis of the pros and cons of #PayFac vs. One of the key differences between payment aggregators and payment facilitators is the size of sub-merchants they are servicing. Unlike PayFac technologies, ISO agreements must include a third-party bank to sponsor the contract. Generally, a PayFac is a good fit for businesses that process less than $1 million in payment volume annually, while an ISO is well-suited for larger businesses that process more than this. Payment facilitators have a registered and approved merchant account with the acquiring bank. This model gives your users the ability to seamlessly accept payments directly from your platform and allows you to own and monetize the payments experience. Marketplace vs ecommerce platform: What's the difference? Read article. About Us; FAQs; Blogs; Sponsorships; Careers; GETTRX Blogs. Lower. 0 vs. For example, an artisan. Payfac: A payfac operates under a master merchant account and creates subaccounts for each business it services. While an ISO, or independent sales organization, is similar to a Payfac, there are some key differences. The facilitator company collects and manages the money. Click to read more nearly thing an ISO the real what it has to do with payment processing! 7. FIS’ rival, Fiserv, acquired the remaining stake of Finxact for $650 million, while another company, Fintech Amount, bought Linear for $175 million. In fact, ISOs don’t. The application users complete a simple application. However, PayFac concept is more flexible. 40% in card volume globally. 70. The underlying role that these fill for a business is to provide merchant services, and you can read our reviews of various merchant service providers here. A payfac is also responsible for underwriting and risk assessment, settling funds with submerchants, dealing with chargebacks and disputes, and ensuring compliance with regulations in the payment industry. If the intermediary entity, which funds the sub-merchants, uses different MID for each merchant, it is called a payment facilitator. This is because the. Square has been one of the most disruptive technology companies in the past decade, yet they recently caught the media’s attention for the wrong reason. But to banks and merchants it means something very different. In order to understand how. A payment facilitator (PayFac) is a merchant services business that sets up electronic payment and processing services for business owners, so they can accept electronic payments online or in-person. Payment facilitators, aka PayFacs, are essentially mini payment processors. PayFac-as-a-Service (PFAAS) combines easy-to-integrate payment technology, full-service offerings, and transparent pricing to deliver Independent Software Vendors a simple way to harness the full power of payment facilitation – minus. 3. In essence, they become a sub-merchant, and they face fewer complexities when setting. The distinction between wholesale ISO and PayFac is thusly less critical than the distinction between being a technology company and being a troglodyte. A payment facilitator (payfac) is a service provider for businesses that simplifies the merchant-account enrollment process. The choice between a PayFac and a payment processor depends on your business needs, industry, and desired level of support. com. Our payment-specific solutions allow businesses of all sizes to. The customer views the Payfac as their payments provider. For businesses, the difference between using payfac-as-a-service compared to becoming a payfac comes down to time, cost, and risk. Payment Facilitators vs. The SaaS provider onboards clients via a non-intrusive application process -- making it simple for the user base to quickly begin accepting customer payments by credit card. Our digital solution allows merchants to process payments securely. Generally, a PayFac is a good fit for businesses that process less than $1 million in payment volume annually, while an ISO is well-suited for larger businesses that process more than this. The monitoring process ensures that there are no anomalies and in cases of unlawful activities, suspensions are placed. They typically work with a variety of acquiring banks, using those relationships to "resell" merchant accounts to merchants. However, the setup process might be complex and time consuming. So, the main difference between both of these is how the merchant accounts are structured and organized. Modern PayFacs find it more profitable to integrate with just one processor/gateway and provide merchant processing services (onboarding, chargeback. Merchants need to. Payfac: A payfac operates under a master merchant account, and creates subaccounts for each business it services. The unique relationship PayFacs have with their merchants exposes them to more risk than your average ISO – even more than most wholesale ISOs – but, in return, PayFacs gain a lot of control over how they price and who they work with. June 3, 2021 by Caleb Avery. By setting up its own merchant account via an ISO, the retailer can negotiate specific terms and rates, potentially saving money in the long run. It is when a business is set up as a primary merchant account and provides payment processing to its sub-merchants. Fast, efficient boarding solutions that orchestrate third-party and internal systems to help you turn prospects to customers – face-to-face, on the phone, or online. Payfac solutions can be a critical source of revenue generation, allowing ISVs to differentiate their product and service offerings in a crowded space. However, the setup process might be complex and time consuming. ISO serves as an intermediary between merchants and acquiring banks, taking responsibility for essential functions such as merchant onboarding, sales. Unlike PayFac technologies, ISO agreements must include a third-party bank to sponsor the contract. In short, a PayFac or payment facilitator, is a master merchant that supports sub-merchants. By viewing our content, you are accepting the use of cookies. PayFac: How the Two Most Common Types of Payment Intermediaries Differ. You own the payment experience and are responsible for building out your sub-merchant’s experience. Very rarely, said Mielke, do ISVs win with the “knee-jerk reaction of becoming a PayFac and capturing those additional revenues. ISO. The PayFac uses an underwriting tool to check the features. A payment processor is a company that works with a merchant to facilitate transactions. e. 1. PSPs facilitate payments and act as a proverbial middleman between you and the merchant.