Payment Facilitator (PayFac)

Under Visa's model, a payment facilitator is a third party agent that contracts with sponsored merchants on behalf of an acquirer and can own the merchant relationship without the acquirer being a party to that contract. The acquirer pays settlement funds to the facilitator, which pays its merchants. The acquirer must register the facilitator with the scheme, carry out due diligence on it and remains responsible for the acts of both the facilitator and its sponsored merchants.

The model opened card acceptance to micro and small businesses, charities and individuals: signing up can take minutes rather than weeks because the facilitator underwrites merchants itself, often with light checks at first and more as volumes grow. Many software platforms, such as booking systems, e-commerce builders and invoicing tools, become payment facilitators or use a provider that runs the facilitator role for them, so they can embed payments in their product and earn revenue from them.

Trade-offs for merchants include blended pricing that is harder to negotiate, the facilitator's right to hold funds or close accounts under its risk policies, and less control over the acquiring relationship. Visa requires the acquirer to sign a direct agreement with a sponsored merchant once its annual transaction volume exceeds USD 1 million, subject to some exceptions, and facilitators may not sponsor other facilitators, staged digital wallets or money transfer services.