Payment Processing

Payment Processing

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.



Additional resources


Clickbank– As noted above, Clickbank is actually a payment processor and shopping cart all built into one. The biggest benefit of Clickbank is simply ease of use. It’s a very plug-and-play solution that’s allows you to get up and running very quickly. However, Clickbank also has some down sides. They have a high processing fee (7.5% plus $1 on every sale) Also, with Clickbank you’re always going to have higher refund rate and commission hijacking. Which is a disservice not only to you but also to your affiliates.


Stripe – This payment getaway is making it easier than ever before to accept payments online. Beautiful payment forms. Flows seamlessly across desktop and mobile.  Also allows you to do recurring payments, trial offers, coupons, and unlimited subscription opinions.


Plus, their fees are some of the lowest in the industry. 2.9%+ 30 cents per transaction. That’s lower than having your own merchant account. You’d be surprised how those merchant fees add up.


GumRoad– If you’re looking to have your product for sale in record time, then I highly recommend GumRoad. This is for those who have ZERO technical hassle.


GumRoad does have slightly higher fees but they literally take care of the ENTIRE process. You simply upload your product to their servers, select a price, add a description, and hit the publish button. It’s that easy. If you want to be selling your product within the next 10 minutes, this is the one for you.


Keep in mind though that because of the ultra simplicity – you don’t have some of the additional features like direct integration with your autoresponder, upsells or an affiliate program. So it all comes down on the specific needs of your business and that particular product.


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