PayFac (Payment Facilitator)
A company that aggregates sub-merchants under its own master merchant account, taking on underwriting and compliance to enable instant onboarding.
Full definition
A Payment Facilitator (PayFac) sits between merchants and a sponsor bank or processor. Unlike an ISO that simply refers merchants, a PayFac signs up sub-merchants under its own master MID, handling underwriting, risk, and compliance internally. This enables much faster merchant onboarding and creates a different economic model: PayFacs typically earn higher margins but take on more risk. PayFacs are highly attractive M&A targets because they own the merchant relationship and the technology stack.
Related terms
A third-party company authorized to sell or lease payment processing services on behalf of a sponsoring bank or processor.
The collection of merchant accounts a payments company processes for, valued for sale based on the income stream they generate.
The unique identifier assigned to each merchant by a payment processor. The unit of measurement for portfolio size.
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