What is a Payment Facilitator?

 In PCI Compliance

Historically, software companies that wanted to offer payments to their customers needed to establish a referral relationship with a payment processor and complete a payment integration in order to extend payments to their customer base.

In recent years, payment facilitators have made it easier for merchants to accept payments through their software. Software providers that act as payment facilitators make it easy, safe and convenient for clients to accept electronic payments for goods or services. Here’s what you need to know about payment facilitators and how they work.

What Is a Payment Facilitator?

A payment facilitator is a company set up to accept electronic payments with the infrastructure needed to process high-volume transactions on behalf of clients. The clients of payment facilitators are referred to as sub-merchants. Payment facilitators handle the onboarding process for sub-merchants and manage the payment transaction from authorization to funding.

Payment facilitators allow clients to take payments utilizing their financial infrastructure. Facilitators have streamlined the application and onboarding processes, making it easy for clients to accept payments quickly and safely.

Overview of the Payment Facilitator Model

Using this model, facilitators set up a master merchant account through a leading acquirer. They then allow their clients to use their infrastructure to accept payments. This model has significant advantages for software providers as it gives them control over the payment experience and increases revenue generated from payments.

Payment Facilitator Requirements

There are several requirements that a software provider must meet in order to become a payment facilitator. Facilitators need substantial cash reserves and capital to support staffing of full-time employees to manage ongoing payment infrastructure support, including contracts, funding, reporting and customer services for sub merchants as well as risk and underwriting. Additionally, software providers must obtain financial institution sponsorship as well as undergo a rigorous PCI audit. Payment facilitators are required to pay registration and annual renewal fees of $5,000 each to Visa and MasterCard.  Payment facilitators are also 100% liable for their merchant portfolio.

Getting Started

We at Paragon Payment Solutions are committed to helping software companies thrive in the payments space. Whether looking to become a payment facilitator or only want to leverage the key advantages of the program, Paragon is here to support your needs.

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