payment facilitation as a service

What is Payment Facilitation as a Service? PayFac as a Service

The Software-as-a-Service industry has grown to provide users with all sorts of opportunities. One of the most convenient ones is acting as a payment facilitator for merchants, in what is known as Payment Facilitation as a Service, or PayFac.

Sooner or later, you might be asked by your merchant to integrate payment processing into your platform, which is why integrating a PayFac-as-a-Service model can be of great benefit to you.

In this article, we’ll walk you through the uses of PFaaS, how it works, and the benefits that it can bring to your business.

What is PayFac-as-a-Service?

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. This means that a SaaS platform can accept payments on behalf of its users.

For SaaS providers, this gives them an appealing way to attract more customers through the addition of payment processing to their service portfolio. And for end users, it allows them an easier and less expensive way to set up payment processing, as well as consolidate it with their other services.

How Does PayFac as a Service Work?

Payment Facilitation, or PayFac, is very straightforward. An organization opens a master merchant account with a bank for the purposes of working with any number of sub-merchants.

In effect, they act as the payment processor for the merchants that they want to bring in, making the normal process of getting a merchant account much simpler for the sub-merchants.

With PFaaS, this is taken a step further. Now another organization acts as the master and provides you with the payment tools to act as a payment facilitator. So, while you are a sub-PayFac to them, you can still provide traditional PayFac services to your own merchants.

Why Should a Software Provider Use PayFac as a Service?

For developers and businesses, adding PFaaS to your catalog can open up a world of opportunities. From allowing you to manage multiple merchants from one location, to giving you the tools to personalize their experience, PFaaS turns your offering into a powerhouse. Let’s take a look at some of the ways in which PFaaS can boost your potential:

Have all your merchants in one place

One of the great perks of PFaaS is that you can manage multiple merchants from one centralized location. This reduces the amount of time and resources needed to manage these accounts and makes it easier to keep track of important payment data for all of them simultaneously.

Turn payment integration into a source of income

Having to integrate a merchant’s payment processing into your software platform isn’t uncommon. Typically, you don’t stand to gain much from it. However, with PFaaS you can not only make that integration much simpler, but actually benefit from it.

Through software fees and even payment processing fees, you can create a recurring revenue channel. And you don’t have to go out of your way to do it either.


Software-as-a-Service platforms are all about scalability and thinking ahead, and this should also apply to the way we process payments. PFaaS allows developers to scale their payment processing services as needed and grow their business as the number of merchants they get increases.

Easier onboarding process

In a PFaaS ecosystem, a merchant doesn’t have to go through the hassle of setting up all the requirements they need for a standard merchant account. Your master account already satisfies all of that. All they have to do is sign an electronic application and they are in. This also makes the process of setting up their payment processing on your platform much easier for you.

How Does PayFac as a Service Help Your Business Grow?

Offering PFaaS solutions to merchants is an excellent way to attract more clients. That’s you are able to provide them with a much more attractive payment facilitation option than traditional merchant accounts.

Here are the four ways in which a PFaaS solution can make your business more attractive to merchants:

Cheaper than standard options

PFaaS is cheaper for merchants as it becomes an all-in-one fix to their payment processing. No need to set up additional hardware or software. By setting up their payment processing directly through their software providers, merchants can consolidate their business structure and support systems, as well as receive additional aid from their software platform such as invoicing and billing services.

Rapid Approval

There are a lot of steps and paperwork involved in opening a merchant account, and even more so to integrate one with a software provider. However, by letting the software provider handle the processing directly you skip a lot of the underwriting process so you can get right down to business.

Thanks to a much more streamlined assessment process, you can get your account approved in minutes rather than days. This makes it so more merchants can accept payments much more quickly.

Simple Fee Structure

One of the things merchants have to do when applying for a merchant account is research the fees that will come with the account. This process is significantly simpler with a PFaaS model. A software vendor can offer a flat-rate fee structure to merchants that is simple to understand. That way they always know what to expect.

Instant End-to-End PCI Compliance

An important aspect of setting up a merchant account is ensuring that you are compliant with PCI requirements. These can be confusing for some people and require a certain level of knowledge. With your software provider acting as the master account, you already have assured PCI compliance from the get-go. This makes the process a lot simpler for merchants.

Potential Detractors

The system is not without its downsides, however small they may be. One aspect of PayFac as a Service that could be considered a downside is the way that payments show up for customers in their statements. Instead of showing up with the name of the business from whom they made a purchase, it would show up under the name of the master account. This could lead to confusion in some cases if the master account has a name that’s very different from the type of business where the purchase was made.

Another potential point of conflict for some businesses is the added layers to financial transactions. In a PFaaS model, the payment is being processed as if made to a third party, which some businesses might not want for clarity purposes.


PayFac as a service is a practical way for software providers to offer their clients another useful service in the form of payment processing, while at the same time reaping some benefits from their hard work. By acting as the master merchant account, they can integrate multiple merchants in one centralized location. While handling their business payments through another party might not be appealing for all businesses, it definitely will make your offerings more appealing to the public in general.

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