PayFac-as-a-Service
PayFac-as-a-Service is a model in which a registered payment facilitator provides its infrastructure, registrations, and risk management to software platforms so they can embed payments and earn payment revenue without becoming registered PayFacs themselves.
Becoming a registered payment facilitator is expensive and slow: card-network registration, a sponsor bank agreement, PCI DSS Level 1 certification, underwriting and risk teams, and capital reserves against sub-merchant losses. Industry estimates commonly put the build at a year or more and seven figures in cost before the first transaction. PayFac-as-a-Service (sometimes “managed PayFac”) lets a software platform skip that build by operating under an existing PayFac’s registration.
How it works
The platform integrates the provider’s boarding API and payment API. The provider runs KYC and underwriting on each merchant the platform brings, carries the compliance and financial risk, and handles settlement and funding. The platform controls the merchant experience (signup, checkout, dashboards) and earns a share of the payment economics, typically expressed in basis points on processed volume. From the merchant’s perspective, payments are simply a feature of the software.
Why it matters
The label covers a wide range of arrangements, so the details determine what you actually get. Key questions: Is the provider the registered facilitator, or reselling someone else’s program? Who is the sponsor bank? How fast is boarding, and what share of merchants clears automated underwriting? How is your revenue share calculated and reported? Can you see interchange and network fees separately from the provider’s markup? A provider that also owns its processing stack removes one more intermediary between your platform and the card networks.
QorPay offers PayFac-as-a-Service as a registered payment facilitator of Pathward, N.A., processing on its own QorCommerce platform with boarding handled by its Automated Underwriting module.