What is (PFaaS) — by Mastercard
- A Payment Facilitator (PayFac) is a model that enables businesses to simplify the merchant onboarding process by allowing a master merchant to process payments for multiple sub-merchants under a single account. This eliminates the need for each merchant to establish their own acquiring relationship.
- PFaaS is the next evolution of the PayFac model, providing businesses with a ready-to-use infrastructure. Instead of building and managing complex risk, compliance, and payment processing systems, PFaaS allows companies to leverage an end-to-end service.
- : Businesses had to work directly with acquirers, leading to long onboarding processes and high setup costs
- : Payment Service Providers (PSPs) streamlined payment acceptance by allowing businesses to process transactions under one umbrella account, but underwriting and onboarding were still complex.
- : By the early 2010s, PayFacs enabled faster onboarding of sub-merchants, lowering compliance risks and simplifying payments.
- : The model evolved to offer PayFac capabilities as a service, helping platforms, ISVs, and software providers integrate payments effortlessly.
:
1️⃣ Acquirers
- Financial institutions that provide merchant accounts and settle funds for transactions.
2️⃣ Payment Facilitators
- The master merchants that onboard sub-merchants, handle transactions, and ensure compliance with regulatory requirements.
3️⃣ Sub-Merchants
- Businesses or individuals that process payments through the PayFac’s infrastructure.
4️⃣ Independent Software Vendors (ISVs)
- Software platforms and SaaS companies that integrate embedded payments into their services using PFaaS.
5️⃣ Card Networks (Visa, Mastercard)
- Facilitate the authorization, clearing, and settlement of card transactions.
6️⃣ Regulators & Compliance Bodies
- Oversee AML (Anti-Money Laundering), KYC (Know Your Customer), PCI DSS, and other financial regulations.
7️⃣ Risk & Fraud Management Providers
- Third-party services that help detect and mitigate fraud risks in transactions.
- Research & Selection (1-2 months)
- Integration Planning (3-4 weeks)
- Technical Integration (1-3 months)
- Compliance & Security (2-4 weeks)
- Soft Launch (2-4 weeks)
4-8 months (compared to 12-24 months for a traditional PayFac setup).
