payment facilitator-vs-payment-processor

Payment Facilitator vs Payment Processor

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-transactions 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 Beanstream?

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

At the end of the day it is just the terminology of what Beanstream is to your account. No matter your payment needs, Beanstream 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.

Nicole Stright

Nicole Stright

Nicole is our coffee dependent content specialist. With a quick-witted way with words, she could make you enjoy reading an instruction manual. She was born American, raised Canadian and has lived briefly in Poland. A quintessential west coastian she can be found running the seawall, practicing savasana in yoga or enjoying an over-hopped I.P.A. Nicole is responsible for all of the bean puns as well as creating compelling copy driven by analytics that converts. She strives to simplify the complicated and wants readers to easily understand the often convoluted industry of payments.
Nicole Stright