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Understanding the Difference Between a PayFac and a Processor

Choosing the Right Payment Solution for Your Business

In today's digital world, businesses of all sizes rely on efficient and seamless payment processing solutions to serve their customers. Two key players in the payment industry are Payment Facilitators (PayFacs) and Processors. While their ultimate goal is to facilitate payment transactions, there are distinct differences between them. In this comprehensive blog, we will delve into the disparities between PayFacs and Processors, explore the benefits of each, and guide you in selecting the ideal payment solution for your business.

Payment Facilitators (PayFacs):

Payment Facilitators, often referred to as PayFacs, are companies that simplify the payment process for smaller businesses. They aggregate merchants under their own master merchant account, eliminating the need for individual businesses to establish their own merchant accounts. This streamlined approach allows businesses to quickly and easily start accepting payments without the complexities associated with traditional merchant accounts. PayFacs offer several advantages:

  1. Streamlined Onboarding: PayFacs provide a simplified onboarding process, allowing businesses to start accepting payments more quickly. The underwriting process is often faster and less stringent than that of traditional merchant accounts.

  2. Simplified Pricing: PayFacs typically offer straightforward pricing structures, making it easier for businesses to understand and budget for payment processing costs. They often charge a flat rate or a percentage fee per transaction, simplifying financial planning.

  3. User-Friendly Platforms: PayFacs develop user-friendly platforms that make it simple for merchants to manage their payments. These platforms provide intuitive dashboards, real-time reporting, and tools for managing transactions, refunds, and chargebacks.

Examples of popular PayFac companies include Square, Stripe, PayPal, Shopify Payments, and Braintree. These companies have gained prominence for their innovative payment solutions, ease of use, and strong customer support.


Processors, on the other hand, are companies that specialize in the technical aspects of payment processing. They facilitate the authorization, processing, and settlement of payment transactions between merchants, customers, and financial institutions. Unlike PayFacs, Processors work with individual businesses that have their own merchant accounts. Let's explore the reasons why a business might choose a Processor over a PayFac:

  1. Flexibility and Control: By partnering with a Processor, businesses have the flexibility to choose their acquiring bank and establish their own direct merchant account. This provides them with more control over their payment processing operations, including negotiating rates, accessing detailed reporting, and customizing their payment workflows according to their specific needs.

  2. Scalability: Processors are often better equipped to handle businesses with higher transaction volumes or complex payment requirements. As a business grows, having a dedicated merchant account with a Processor allows for more seamless scalability and the ability to handle larger transaction volumes without potential restrictions or limitations imposed by a PayFac.

  3. Customization and Integration: Processors typically offer more advanced features, customization options, and integrations with various business systems such as accounting, inventory management, and customer relationship management (CRM) software. This allows businesses to tailor their payment processes to their unique operational workflows and enhance overall efficiency.

  4. Competitive Pricing: While PayFacs may offer simplicity and ease of use, Processors can sometimes offer more competitive pricing structures, especially for businesses with higher transaction volumes. Processors often provide tailored pricing plans based on specific business needs, allowing for potential cost savings in the long run.

  5. Branding and Identity: By working with a Processor and having their own merchant account, businesses can maintain their own branding and identity throughout the payment process. This consistency can contribute to building customer trust and loyalty, as well as aligning with the overall brand image of the business.

Choosing the right payment solution for your business is crucial to ensure smooth and efficient transactions. PayFacs, such as Square, Stripe, PayPal, Shopify Payments, and Braintree, simplify the payment process for smaller businesses by aggregating merchants under their master merchant accounts. They offer streamlined onboarding, simplified pricing, and user-friendly platforms.

Processors, on the other hand, provide businesses with greater flexibility, control, scalability, customization, and competitive pricing. With Processors, businesses can establish their own direct merchant accounts, negotiate rates, access advanced features, and integrate with existing systems.

Consider factors such as transaction volume, complexity, scalability goals, customization needs, and brand identity when selecting the right payment solution for your business. Stay informed about the evolving payment industry, explore the offerings of various payment solution providers, and make an informed decision that aligns with your business objectives. If you need assistance or guidance in finding the ideal payment processing solution that meets your unique requirements, don't hesitate to contact Make the Impact. Our team of experts is ready to provide personalized assistance and help you navigate the complexities of payment processing. Take the next step towards optimizing your payment operations by reaching out to Make the Impact today.

By understanding the differences between PayFacs and Processors, you can optimize your payment processes, enhance customer satisfaction, and drive the growth of your business.

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