What Is a Payfac (Payment Facilitator)?

Do you know the specifics of how your business accepts payments? Traditionally, you'd need a payment processor, merchant account, payment gateway, and other relationships and accounts. But, there may be an easier, more efficient way.

That’s where payment facilitators (payfacs) come in. These companies operate on the payfac as a service model, simplifying the payment acceptance process. But, what is a payfac, and how can it help you build and grow your business? Find out below.

Decoding Payfacs

If you’ve never used a payfac, here’s what you need to know:

The Role of a Payment Facilitator

Payfacs are companies that help with every aspect of the facilitation of payments, simplifying access to electronic payments for your company. Rather than having to work with multiple parties, payfacs let you manage everything having to do with your payments in one place.

One main advantage of using the right PayFac (Payment Facilitator) is that they will enable greater control over payment acceptance and payouts to sub merchants. By streamlining the onboarding process and managing the entire payment flow, PayFacs ensure quicker and more efficient transactions. This control allows businesses to offer customized payment solutions, enhance user experience, and reduce the risk of fraud, ultimately leading to improved operational efficiency and customer satisfaction. Payfacs simplify the management of merchant accounts. They help manage compliance, underwriting, and other aspects of dealing with payment processors that may prove challenging.

Why Merchants Embrace the Payfac Model

The payment facilitator model is becoming increasingly popular as more merchants choose payfacs over traditional methods. There are multiple reasons for this:

• Simplicity: Payfacs can be easier to work with than traditional merchant accounts, and they tend to be easier to incorporate into your business model. When working with a payment provider like Revolv3, your payment stack can seamlessly be incorporated into your business model. By simplifying the onboarding process and offering integrated payment solutions, Revolv3 reduces the complexities typically associated with traditional payment providers. 
• Cost: With the right payfac, you can cut the cost involved in online payments.
• Scalability: Payfacs are often easier to scale than traditional models of accepting payments.

The Importance of Payfac to E-Commerce and Retail Businesses 

Regardless of whether you have an e-commerce or retail business model, you may want to consider working with a payfac. Here are a few reasons why: 

Ease of Onboarding

The onboarding process with traditional merchant accounts and payment processors can be tricky. It often involves quite a bit of paperwork and the underwriting process can take time.

But, that’s not the case with most high-quality payfacs.

For the most part, payfacs have streamlined the onboarding process. So, signing up to accept digital payments and getting approved to do so can be relatively quick and painless. Moreover, these systems are usually simple to integrate into your current business. You won’t typically have to learn any coding or have to deal with any substantial learning curves when you get started.

Cost Efficiency

The old adage, “It costs money to make money,” proves true time and time again. It costs you money to process digital transactions. In most cases, you’ll have to pay a set fee to charge a digital payment form plus a percentage of the transaction. That, in addition to monthly fees, can get pricey relatively quickly.

While payfacs don’t typically provide free services, the fees they charge are often significantly lower than you would have to pay using traditional options. That cost savings means that you’ll be able to turn more of your revenue streams into profits.

Enhanced Payment Capabilities

Payfacs often give you more capabilities than traditional payment system providers. And, those capabilities can come in handy when you’re running your business. The  payment capabilities you should be searching for in a payfac include:

Sub-Merchant Payouts

There may be times when you work with sub-merchants (merchants that sell your services for you). While this can be a great way to expand the reach of your business, it can also lead to payment headaches when you work with traditional payment service providers.

However, with the right payfac, you can set sub-merchants up on your account and ensure that your sales are separated from your sub-merchant sales. This can make it easier to handle sub-merchant payouts. All the tracking for your sub-merchants will happen automatically rather than you having to manually track sales and payments.

Split Funding

With traditional payment processors, when a card or other payment method is charged, the funding from that payment goes to a single entity — typically the owner of the merchant account. However, that can be challenging when you work with partners and vendors that also need to take their piece of the payment.

To solve this problem, use a payfac that offers split funding capabilities. That means that funds from a single credit card or other digital transaction can be split between business owners, partners, and vendors as needed. Not only can this eliminate muddy waters when working with third parties, but it can also make reporting far easier.

Stacked Payfac Capability

Payment processors typically require you to work around their payment technologies, but the best payfacs offer stacked payfac capabilities. This means that they allow you to embed payfac functionality into your company’s tech stacks.

Risk Management and Compliance

When you work with a traditional merchant account or payment processor, you’ll need to manage risk and compliance requirements on your own. However, a payfac acts as an intermediary between you and the payment processor, often managing compliance and risks on your behalf.

That’s important because any hiccups in the risk management and compliance process can lead to your merchant account being frozen. That could lock your company’s funds up until issues are resolved and those resolutions have been verified.

Customer Experience Enhancement

One of the biggest benefits of using a payfac is an enhanced customer experience. Payfacs typically incorporate state-of-the-art technologies to improve approval rates and offer all of the popular payment methods available. As a result, your customers won’t experience nearly as many headaches during checkout, which could improve your conversion and customer retention rates while limiting customer churn.

Revolv3: Pioneering the Future of Payment Facilitation

Revolv3 rethinks the payfac model to enable additional functionality for your business strategy without the unnecessary overhead costs.  Revolv3 offers multiple benefits beyond what you would expect from a typical payments provider. 

For example:

• Revolv3 never charges a fee for declined payments.
• Revolv3 uses dynamic routing to increase approval rates and reduce instances of unnecessary declines.
• Revolv3 is easy to incorporate into your business and scales as your company grows.

Schedule a free Revolv3 demo to find out how the platform can help expand your business.