What is a PayFac-as-a-Service Solution?

What is PayFac-as-a-Service-ExactPay

A PayFac-as-a-Service (PFaaS) is a solution that allows non-financial businesses to act as payment facilitators. As is the case with all as-a-service models, PFaaS reduces the barrier to entry for many businesses by delivering a capital-intensive solution as a more affordable pay-as-you-go service. This allows its users to buy rather than build a solution from scratch, while still reaping the benefits of a traditional PayFac or payment facilitator model. 

A payment facilitator provides the infrastructure, expertise, relationships and processes that allow software and platform providers to accept payments. Payfacs partner with card networks and an acquiring bank to provide systems to onboard merchants, manage risk and adhere to compliance guidelines—among many other responsibilities. These entities register for a master merchant account and seek to act as payment aggregators for a collection of sub-merchants. 

PayFac Benefits

The payment facilitator model has become especially popular with platforms, marketplaces and SaaS businesses who serve smaller businesses that need to process payments. For example, a dog-sitting marketplace that connects pet owners with pet sitters could become a PayFac, processing payments on behalf of its pet-sitting small business owners. 

PayFacs earn a portion of the processing fees from the transactions processed on their platforms—a larger portion than other payment models. Becoming a PayFac also offers other benefits, such as greater control over user experience, including branding and fund disbursement. These entities are also able to onboard their clients faster since their sub-merchants are not required to obtain a typical merchant ID, which usually includes an extensive underwriting process.

Challenges With the PayFac Model

Building out a PayFac infrastructure from the ground up is an expensive up-front investment, however, and those who choose this path may have to wait many years before their investment pays off. From developing risk management processes to delivering customer support, PayFacs take on the entirety of running a payment business in addition to their core business. And though PayFacs earn the most from processing fees compared to other payment models, they must also take on the majority of the risk of processing payments on behalf of their sub-merchants. This could include the risk of chargebacks, fraud and customers who go out of business.  

Enter PayFac-as-Service

PFaaS solutions offer a unique opportunity for small to midsize businesses to act as PayFacs without the initial upfront investment. Integrated payment providers deliver everything that is needed—payment infrastructure, relationships with banks and card networks, security, onboarding, customer service and more. And the best part? PFaaS clients get to take advantage of an additional revenue stream while the provider helps shoulder a portion of payment processing risk.

Interested in getting started on your path to Payfac by deploying PFaaS? We’re here to help you navigate the process. Just get in contact with us and/or book a meeting through this form and we’d be happy to help.  Read about the options available for software partners, or contact us today. 


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