PayFac to
the Rescue

As the marketplace becomes more and more competitive, merchants are looking for affordable ways to get their payment processing accounts up and running fast. Here’s how one type of merchant services model makes that possible.

What is a PayFac?

A PayFac, or payment facilitator, is a merchant services model that streamlines the merchant account enrollment process by onboarding a merchant as a sub-account under the PayFac’s master account. Stripe and Square are two examples of well-known PayFacs that are incredibly popular with business owners in a wide variety of industries. With a PayFac sub-account, the merchant doesn’t need to go through the lengthy underwriting process to set up an individual merchant account, since it is handled by the merchant services provider. Another important aspect of PayFac models is transparent pricing — one, simple, monthly flat rate makes it easy for merchants to know upfront exactly how much they are paying.

How do Payment Facilitators work?

First, the merchant services provider registers with an acquiring bank to provide payment processing services as a master merchant account provider. Once this process is complete, all the merchant has to do to enroll is furnish the PayFac provider with a few key data points— there’s no need for them to fill out paperwork or provide detailed documentation. Merchants are then onboarded as sub-merchants under the PayFac’s master account and can begin accepting payments immediately.

To fully understand the benefits of the payment facilitator model, it’s important to first take a look at what goes into creating a standard merchant processing account. In a traditional onboarding model, a merchant must first apply for a merchant ID and sign a direct agreement with a sponsoring bank. This enrollment and onboarding process often entails a great deal of paperwork, and can take days or even weeks to complete. In the meantime, the merchant’s ISV or VAR is hoping that the merchant has a positive experience and does not experience any frustrations that could send them in the opposite direction.

By contrast, the payment facilitator model eliminates the lengthy underwriting process and brings developers even more control over their merchant’s processing experience. To become a PayFac, the ISV or VAR signs a direct agreement with a processing bank (e.g., Elavon or Fiserv) which enables them to operate as a master merchant account. By operating as a master merchant account, the payment facilitator has the ability to onboard sub-merchants. The sub-merchants can then tap into the payment facilitator’s existing relationships with acquiring banks, as well as the PayFac’s processing technology, in order to get up and running fast with their own processing account.

PayFac vs. Traditional Merchant Service Accounts

The PayFac Has a Direct Agreement With the Bank

Since the payment facilitator owns the direct agreement with the bank, their sub-merchants do not get locked into a contract with the bank’s terms (as is the case with the traditional model). Rather, the sub-merchants sign into the PayFac’s merchant agreement, thereby giving the payment facilitator more flexibility with managing their sub-merchants.

Rapid Onboarding Process

As the master account, the payment facilitator undergoes the lengthy onboarding process—not their sub-merchants. To get their merchant account through the PayFac, all that the sub-merchant has to do is provide a few key data points to the payment facilitator. The information is then evaluated by an underwriting tool, and the application is either approved or declined in real time. This process takes minutes, as opposed to the standard onboarding time frame of days or weeks.

Risk Management

Another major difference between the two account models is risk management. Because the acquiring bank underwrites the payment facilitator instead of the merchant, the payment facilitator assumes liability for all financial risk for their merchant sub-accounts.

Simple Flat-Rate Structure

Unlike traditional merchant service providers, PayFac models have a simple and transparent flat-rate fee structure, without any hidden fees or surprise rate changes.

The PayFac Controls the Flow of Funds

The payment facilitator is able to direct how much money is funded to the merchant, and can even divert portions to other bank accounts if desired.

The Cardknox Go Solution

Whether you are a merchant or one of our partners, Cardknox Go provides the perfect payment processing account that you’ve been looking for!

Start Accepting
Payments Right Away.

With our own PayFac model, Cardknox Go, you can take advantage of a fast, hassle-free onboarding experience so you can start accepting payments right away. Our Cardknox Go solution gets you up and running quickly without the need for lengthy underwriting. Plus, you’ll enjoy the ease of flat-rate pricing, support for a wide variety of e-commerce platforms, robust security, support for recurring payments, and built-in PCI compliance. Our Cardknox Go solution ensures a smooth and efficient onboarding process without compromising on quality— you’ll enjoy our superior in-house white glove customer support any time of the day or night.

If you’re a developer or independent sales vendor, you’ll be able to benefit from our quick and easy onboarding process for your merchants. By providing only a few pieces of information, your merchants can be approved and start taking payments in no time at all!

Ready to Put Your Business on
the Fast Track to Profits?

Learn more about Cardknox Go today!