PayFac is short for Payment Facilitator AKA Payment Aggregator. The term refers to an individual or entity that accepts payments on behalf of other businesses. These entities are commonly known as sub-merchants.
A few important pointers about PayFac’s:
PayFac’s assume the responsibility for Chargebacks, Fraud, KYC, (Know Your Customer) AML (Anti Money Laundering)
They can underwrite new merchants very quickly (sometimes instantly)
They are responsible for PCI compliance.
They need to register with an acquiring bank.
PayFac’s will usually need to put up a money reserve to assume the risk.
PayFac’s will need a software similar to eDataPay to handle all the requirements.
A PayFac is an abbreviation for Payment Facilitator. A payment facilitator is a relatively new type of an intermediary entity, which emerged as a result of merchant services market evolution. In contrast to other intermediaries, such as ISOs, payment failitators handle merchant underwriting process, relieving acquirers from the need to perform related administrative procedures. Here are a few articles on the subject: Payment Facilitators’ Role in Merchant Services – Paylosophy, PSPs, Payment Facilitators, and Aggregators – Paylosophy.
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