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Payment Facilitator vs Payment Processor


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As soon as you step into the world of payments, you are surrounded by new terminology that isn’t always self-explanatory. For instance, a Payment Facilitator and a Payment Processor at a glance could look like they could mean the same thing, but it is never that simple in payments.

What is a Payment Facilitator?

A Payment Facilitator or Payfac is a service provider for merchants. When you want to accept payments online, you will need a merchant account from a Payfac.

Depending on your processing volumes there are two different types of merchant accounts that you will qualify for, either a PSP and an ISO. In general, if you process less than one million annually, you would be looking for a PSP merchant account.

A Payfac provides PSP merchant accounts. It used to take weeks to get a merchant account, but then Payfacs came around and simplified the enrollment process by creating a sub-merchant platform.

A sub-merchant platform involves a Payfac that has been pre-approved for one master merchant account with an acquirer, like TD. They are then able to sign-up merchants underneath their master account as sub-merchants, thus expediting the process. Merchants used to (and still can) get individual merchant accounts, but it can be a very cumbersome process, which is why Payfacs adopted this other model.

This has made it far easier to sign-up for a merchant account. Merchants can fill in a small online application, get evaluated by an underwriting tool, and then be boarded as a sub under the master account.

This model is also appealing to merchants as the risk is on the Payfac, as they hold the master account.

What is a Payment Processor?

As soon as you start processing large volumes, there are benefits to having your own merchant account, as opposed to having a sub-merchant account under a Payfac. For instance, you can usually get better per-transaction rates.

A payment processor will connect you to the acquirer directly, setting you up with an individual merchant account. If this sounds like a gateway, that is because it essentially is.

The difference is that a payment processor can provide a single gateway for multiple payment methods. Think debit, credit, EFT, or new payment technologies like Apple Pay. It can also provide risk-management services and other payment solutions.

So what is Bambora?

Bambora is both a Payment Facilitator and a Payment Processor. If you signed up for a standard merchant account with Bambora, we would act as a Payment Facilitator. If you have signed up for a ISO merchant account, then we act as a payment processor.

At the end of the day it is just the terminology of what Bambora is to your account. No matter your payment needs, Bambora has a solution. If you need additional help understanding the difference, or don’t know which type of merchant account is for you, feel free to contact our sales team.