Question 1

What is a payfac?

Accepted Answer

A payfac, short for payment facilitator, is a merchant services company that provides payment processing in a more flexible and efficient way than a traditional merchant acquirer (also called an ISO or merchant sales rep). The model was developed by Visa and Mastercard, and it enables payment acceptance without requiring merchants or ISVs to open a traditional merchant account. Payfacs offer processing to business clients, known as sub-merchants or sponsored merchants, through their own links to payment processors. They act as an intermediary, gathering sub-merchant transactions and passing them to processors for completion.

Question 2

How is a payfac different from a traditional payment processor?

Accepted Answer

Traditional merchant acquiring requires the merchant to open an account, which takes time. A merchant acquirer asks for a lengthy signed application and supporting documents such as a voided check, bank letters, financials, bank statements, and processing statements, then runs a manual underwriting process that can take days. Traditional processors also do a hard credit pull that shows on the merchant's credit report as an inquiry. After approval, they produce a VAR sheet that is emailed to the merchant and used to manually set up the gateway. With Payfactory, the entire application and underwriting process happens in minutes, requires no paperwork, leaves no mark on the merchant's credit report, and automatically provisions gateway services with credentials delivered to software providers securely and programmatically. The full round trip is frictionless. Payment facilitation is the fintech version of payment acceptance.

Question 3

What are the benefits of the payfac model?

Accepted Answer

The payfac model simplifies merchant enrollment and gives ISVs more control. Seamless, paperless underwriting sits at the heart of it, which accelerates standup times for merchants. Benefits include:

Near-instant approval
Fast onboarding
User experience control, from enrollment through reporting
A simple, flat fee structure
Next-morning funding for certain industries and customers
Transaction and settlement reporting
Substantial revenue sharing with the ISV Payfacs wrap these services into APIs that software companies integrate to, automating the entire provisioning process into a merchant enrollment experience that can be completed online in minutes.

Question 4

What are payfac embedded payments?

Accepted Answer

Embedded payments are payment acceptance and enrollment built directly into the software that businesses use to run commerce. Earlier integrated-payment providers used hosted payment pages and enrollment flows that broke the ISV's brand and experience, which often caused enrollment abandonment. With a payment facilitator, ISVs let merchants process payments securely inside their own websites or applications, with no need to manage the technical side of processing. Benefits include:
• Improved user experience: Customers complete transactions quickly, with no redirect to a third-party page.
• Increased security: Payment information is entered directly into embedded fields, which reduces fraud risk and the need for sub-merchant PCI validation.
• Customization: ISVs tailor payment forms and the checkout experience to match their brand, improving conversion and reducing abandonment.
• Increased control: ISVs own the payment experience and keep it consistent with their UI and brand.

Question 5

Are there different payfac options?

Accepted Answer

There are several types of payfac implementation:
• Software platform as the payfac: Some ISVs become payfacs themselves. This is the most aggressive model, typically adopted only by the largest ISVs.
• Payfac direct providers: Some larger providers offer payment facilitation as a direct service to sub-merchants that ISVs integrate to. Revenue share, portability, and UX control can be limited, and various constraints make growth difficult.
• Payfac as a Service (PFaaS): In this hybrid model, ISVs embed payfac enrollment and payment acceptance inside their platforms and get the benefits of payfac without the investment, risk and underwriting, infrastructure, staffing, registrations, and audits required to become one.

Question 6

Why is Payfactory different from other payfac providers?

Accepted Answer

Payfactory is the embedded payments arm of Harlow Payments, built by payments industry veterans to let ISVs and SaaS vendors integrate or embed payment acceptance with ease.
• Payfactory is gateway-agnostic, so you can enable it on your current payment platform quickly.
• Fast onboarding and payouts come through RESTful APIs, with competitive rates and no monthly fees, backed by responsive customer service.
• PCI-validated P2PE provides end-to-end encryption for card data in transit.
• State-of-the-art tokenization means your platform stores tokens instead of card data for maximum security.
• Revenue sharing is aggressive, and control stays with you.
Built on Harlow Payments infrastructure, Payfactory is one of the fastest ways to enable merchant payments inside your software.

Payment Facilitation Resources

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