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What is a Payment Facilitator?


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Both the advancements in technology and the reality of the global pandemic throughout 2020 and 2021 have increased the number of online shoppers and eCommerce stores all around the world.

Online transactions are now the norm, and more and more businesses are now looking for ways to easily integrate online payments on their platforms.

The presence of payment facilitators has made it easier and more streamlined for businesses to start accepting online payments, eliminating the lengthy underwriting process that would otherwise be needed.

Yet, what actually is a payment facilitator? Why do you need one? How do you become a payment facilitator on your own?

In this article, we will answer those questions and all you need to know about the payment facilitation model in general.

What is a Payment Facilitator?

A payment facilitator, simply put, is a business that facilitates another business so it can start accepting online credit card payments right away.

To really understand how a payment facilitator works and its benefits, however, we have to understand how online credit card payment processing works.

How businesses can accept online credit card payments: the traditional approach

From a customer’s point of view, an online transaction involving credit card payments may seem quite simple: put the goods on the shopping cart, enter the credit card details, and click checkout.

Behind the scenes, however, the actual process is much more complicated and will involve at least the following parties:

  1. The customer: the online shopper purchasing the goods
  2. The eCommerce store: the online store selling the goods
  3. Payment gateway: a tool/solution connecting the store’s shopping cart and a Payment Service Provider (PSP)
  4. Payment Service Provider (PSP): a company that is responsible for authenticating the transaction with the card issuer to check the card’s validity, limit, and so on. The merchant’s bank can be a PSP, but it can also be companies like Stripe or Paypal. In a payment facilitation model, the payment facilitator is the PSP.
  5. Acquiring bank: the eCommerce store’s bank that will receive the funds from the customer’s bank

Due to the actual complexity of the process, as we can see, before a business can start accepting online credit card payments, it must partner up with a payment gateway and Payment Service Provider (PSP), and must also be approved as a merchant by an acquiring bank.

In practice, the process of getting approved by an acquiring bank may involve a complex and lengthy underwriting process, and even after this long process, there’s no guarantee of being approved.

The payment facilitation model

A payment facilitator essentially acts as a “bridge” between a business willing to accept online payments (a merchant) and an acquiring bank.

As discussed, the process of getting approved as a merchant by an acquiring bank can be quite challenging, and the payment facilitation model essentially bypasses this approval process.


A payment facilitator is a business that has been approved as a special merchant by the acquiring bank, with a Payment Facilitator ID (PFID). The PFID essentially allows this payment facilitator business to share its ability to accept online payment with other businesses, resulting in the payment facilitation model.

In a payment facilitation model, a business looking to start accepting online credit card payments do not need to undergo the lengthy underwriting process with the acquiring bank and instead can start accepting online payments in just a few relatively simple steps:

  1. The business registers for an account on the payment facilitator’s website or platform. The registration (sign up) process typically will only require the business to provide basic information about the business.
  2. The payment facilitator will assess and validate the information submitted in the registration process. Typically the payment facilitator will use an automated underwriting tool for this purpose to make the due diligence process faster and more accurate. If necessary, manual reviews may also be conducted.
  3. Based on the verification process above, the payment facilitator will either approve or reject the application.
  4. If a business is approved, it is now taken under the payment facilitator’s wing as a sub-merchant and can start accepting online credit card payments right away.

Benefits of The Payment Facilitation Model

A payment facilitator makes it easier for businesses to start accepting online payments with several key benefits:

Faster underwriting and onboarding

The payment facilitation model will eliminate the complex and lengthy underwriting process a business must otherwise undergo. A prospective sub-merchant only needs to provide basic business details and agree to a few policies established by the payment facilitator.

As a result, the process of being approved (or rejected) as a sub-merchant will be done in just a matter of minutes as opposed to days or weeks.

More flexible risk management

In a payment facilitator model, the acquiring bank underwrites only the payment facilitator business and not the sub-merchants. Meaning the payment facilitator assumes liability for all financial risks for the sub-merchants. This provides more flexibility for the sub-merchants while also allowing the payment facilitator more flexibility with managing the sub-merchants on a case-by-case basis.

Simpler business model

A payment facilitation model typically involves a simple and transparent flat-rate fee structure without any hidden costs or fluctuating rates. This provides more predictability for both the payment facilitator and the sub-merchants.

Wrapping Up: Becoming a Payment Facilitator

The payment facilitation model enables businesses to quickly and easily accept online credit card payments under the payment facilitator’s merchant ID.

As we can see, becoming a payment facilitator is a lucrative business opportunity, but the entry barrier for starting the business is fairly high. This is where professional payment consultants can help in preparing your infrastructure and policies, as well as ensuring 100% approval as a payment facilitator.

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