Due to their similarities, sellers of record and merchants of record are often confused. Here’s how: Merchant of record Merchant of record vs. Based on that definition, PayFacs take over the. Merchant of record vs. Merchant of record vs. Since the PayFac already has a relationship with the payment processor and the SaaS company, approval takes as little as a few hours. The traditional method of bringing payments in-house involves integrating a payment gateway or processor into the platform, allowing for seamless transactions within the platform. But payment processing is a small part of the merchant of record. March 29, 2021. The sub-merchant agreement includes mandatory provisions. PayFacs take on the liabilities of maintaining a merchant. Facilitates payments for sub-merchants. Payments news: Rich Aberman, co-founder of WePay, teaches Karen Webster what a PayFac is, why it differs from a merchant of record and how to become one. Under the PayFac model, a merchant is set up under the PayFac’s master account, but they are onboarded with their own unique MID. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. Stripe and Square are two examples of well-known PayFacs that are incredibly popular with business owners in a wide variety of industries. ; Selecting an acquiring bank — To become a PayFac, companies. 40% in card volume globally. It is quintessential to crunch those numbers and figure out if the ROI is worth entertaining the thought. Merchant of record vs. Here, the Payfacs are themselves the merchants of record. What is a payfac? A payfac, short for payment facilitator, is a type of provider in the payments industry that simplifies the process for other businesses to accept credit and debit card payments. A Payment Facilitator, or PayFac, is a sub-merchant account used by merchant service providers to provide payment processing services to their own clients, known as sub-merchants. The “merchant of record” concept is not a regulatory construct but rather a set of network requirements that have changed over time. 1. The value of all merchandise sold on a marketplace or platform. Here’s how: Merchant of record. On merchant-owned e-commerce websites, they'll need a checkout interface with a payment gateway that can accept credit and debit card details. Moreover, in a sense, PayFac model relieved acquirers from merchant management functions, which they delegated to PayFacs. This was an increase of 19% over 2020,. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. Global, which also supports financial institutions in card issuing, saw that part of its business record $505 million in adjusted net revenue for the quarter. payment facilitator (payfac) MoRs and payfacs both play significant roles in the ecommerce payment process, but their responsibilities and the scope of their services differ. The merchant accepts and processes payments through a contract with an acquirer. a merchant to a bank, a PayFac owns the full client experience. “A. The MoR is responsible for processing customer payments on behalf of the business, taking on numerous legal and financial. A payment processor sits at the center of the payment cycle. Think of a payment facilitator as a regulated entity that manages card network relationships, sub-merchant onboarding, and payment services for merchants. The PayFac is the merchant of record for transactions. About Us; FAQs; Blogs; Sponsorships; Careers; Contact Us Get Started. Here’s how: Merchant of record The merchant of record (MOR) is responsible for receiving and processing payments on behalf of the merchant, assuming liability for the transaction. A PayFac assumes all the risk involved in payment processing – including fraud loss, chargebacks, and non-payment. For their part, FIS reported net earnings of $4. The MoR is responsible for processing customer payments on behalf of the business, taking on numerous legal and financial. On merchant-owned e-commerce websites, they'll need a checkout interface with a payment gateway that can accept credit and debit card details. Merchant. It provides a technology, allowing to authorize transactions and, potentially, receive transaction settlement information. Merchant of record vs. A return is initiated by the receiving. Merchant of record vs. g. A PayFac is the official merchant of record with the major card brands such as Visa and Mastercard and holds the relationship with the acquiring bank. As mentioned, the primary difference between payment facilitators & payment processors lies in how merchant accounts are organized. 2. Marketplaces and payment facilitators are just two of the ways the payments system has evolved to meet this gap in service availability. Platforms using a traditional payfac solution open a merchant bank account and receive a merchant ID (MID) to acquire and aggregate payments for a group of smaller merchants, typically called sub-merchants. By allowing submerchants to begin accepting electronic. Effectively, Lightspeed has become the Merchant of Record to. However, if the business experiences rapid growth and needs to onboard a large number of merchants, the payfac may face scalability challenges. The marketplace also manages the. payment facilitator (payfac) MoRs and payfacs both play significant roles in the ecommerce payment process, but their responsibilities and the scope of their services differ. Sometimes, a payment service provider may operate as an acquirer in certain regions. The MoR is liable for the financial, legal, and compliance aspects of transactions. Payscout) acts as the Main Merchant (also known as the Merchant of Record) and can board numerous merchants under this “master account. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. A merchant of record is an entity that is legally authorised and responsible for processing customer payments – here's what businesses should know about it. Step 1: The customer initiates a payment transaction on a merchant's website or mobile app. The most significant difference when it comes to merchant funding is visibility into settlements. lasercannonbooty • 2 mo. The sub-merchants are. Payment Processors for Small Business: How to Make the Right Choice for You. Stripe's payfac solutions can empower businesses to accept payments online without a merchant account or merchant identification number (MID) of their own. A payfac is a type of payment aggregator, but it typically provides a more comprehensive suite of services. From the iQ Bar of the Merchant Onboarding Page, click the Operations icon and select PayFac Portal. Here’s how: Merchant of record. An ACH return happens when a bank returns an electronic funds transfer (EFT) to the originating institution. Select Add Sub-Merchant. 00 Purchase price less payfac transaction fee and payment processor/ merchant acquirer fee Transaction data Present card for payment Goods or services Authorization and transaction data $10 (Bill. In a comprehensive white paper on the subject we explained PayFac meaning and how to become a payment facilitator. Because of those privileges, they're required to meet industry. 1. traditional merchant service accounts. Also Read: How to Choose Between a Payment Facilitator (PayFac) and a Merchant of Record (MoR) for Your Business What is the Seller of Record (SoR)? The. Essentially, a payfac is a company that allows its customers to accept electronic payments using their platform. Here’s how: Merchant of record Technically, a PayFac can be used to set up an ISO, but this is usually reserved for online businesses. FinTech 2. net; Merchant of Record A merchant of record is an entity that is legally authorised and responsible for processing customer payments – here's what businesses should know about it. Here’s how: Merchant of record Merchant of record vs. Most payments providers that fill. The MoR is responsible for processing customer payments on behalf of the business, taking on numerous legal and financial. If necessary, it should also enhance its KYC logic a bit. payment facilitator (payfac) MoRs and payfacs both play significant roles in the ecommerce payment process, but their responsibilities and the scope of their services differ. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. Here’s how: Merchant of record. A merchant of record (MoR) is a legal entity responsible for selling goods or services to an end customer. payment facilitator (payfac) MoRs and payfacs both play significant roles in the ecommerce payment process, but their responsibilities and the scope of their services differ. payment facilitator (payfac) MoRs and payfacs both play significant roles in the ecommerce payment process, but their responsibilities and the scope of their services differ. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. Payfacs are registered independent sales organizations (ISOs) that have been sponsored by an. We promised a payfac podcast so you’re getting a payfac podcast. The payfac is responsible for underwriting and onboarding merchants, transaction monitoring, managing chargebacks, and merchant funding. Here’s how: Merchant of record The term “Merchant of Record,” however, does not appear in the most recently published Visa or MasterCard Rules. payment facilitator (payfac) MoRs and payfacs both play significant roles in the ecommerce payment process, but their responsibilities and the scope of their services differ. Merchant of record vs. The. Do the math. Instead of each individual business needing to set up its own merchant account, a process that can be time-consuming, the payfac effectively “rents out” merchant account functionality under its larger master merchant. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. Payfac = a software product, platform, or marketplace that has in integrated payments into its product, and is responsible for the risk of. A Payment Facilitator, PayFac for short, is simply a sub-merchant account for a merchant service provider. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. A payment facilitator is a company (generally an ISV) that allows its users to accept payments through their software using their infrastructure. The MoR is responsible for processing customer payments on behalf of the business, taking on numerous legal and financial. ISOs may be a better fit for larger, more established. FIS’ rival, Fiserv, acquired the remaining stake of Finxact for $650 million, while another company, Fintech Amount, bought Linear for $175 million. Gateway Service Provider. Batches together transactions from sub-merchants before. MOR has to take ALL liability. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. A payment facilitator is a merchant services business that initiates electronic payment processing. That said, the PayFac is. merchant of record”—not the underlying retailers. Thanks to the emergence of. For this reason, payment facilitators’ merchant customers are known as submerchants. A gateway may have standalone software which you connect to your processor(s). A Payment Facilitator, or PayFac, is a sub-merchant account used by merchant service providers to provide payment processing services to their own clients, known as sub-merchants. Basically, if your Payfac solution provider’s merchant or agent were doing something bad, you could end up having your acquiring privileges removed – all because someone under you violated a rule. 20 (Purchase price less interchange) $98. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. As a result, the acquiring bank is in charge of the transaction processing for PayFac customers. A payment processor’s job is to ensure that money flows correctly; the payment facilitator must collaborate with the payment processor. These functions include merchant underwriting, merchant onboarding, sub-merchant funding, and others. The Advantages of the PayFac Model. The Payment Facilitator Registration Process. The MoR is responsible for processing customer payments on behalf of the business, taking on numerous legal and financial. Based on that definition, PayFacs take over the merchant underwriting process from the acquiring bank. A PayFac is an intermediary entity, performing a set of functions (delegated by the acquiring bank) for multiple merchants. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. Establish connectivity to the acquirer’s systems Two-way information flow: • Th Payfac pushes messages the acquirer (transaction info). The SaaS provider onboards clients via a non-intrusive application process -- making it simple for the user base to quickly begin accepting customer payments by credit card. Merchant of record vs. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. The MoR is responsible for processing customer payments on behalf of the business, taking on numerous legal and financial. Today’s PayFac model is much more understood, and so are its benefits. payment facilitator (payfac) MoRs and payfacs both play significant roles in the ecommerce payment process, but their responsibilities and the scope of their services differ. The PayFac provides payment acceptance capabilities to downstream sub-merchants. Join 99,000+. Becoming a payment processor and being a sub-merchant is a much less costly and time-consuming option for SaaS payment solutions . Chances are, you won’t be starting with a blank slate. From there, PayFacs assign businesses as sub-merchants under the PayFac’s master merchant account. What comes to mind is a picture of some large software company, incorporating payment. The. Payment facilitation, or “payfac,” continues to grow in popularity among software providers and is designed to facilitate payment card acceptance without requiring individual merchants to go through the lengthy process of establishing traditional merchant accounts. Instead of each individual business needing to set up its own merchant account , a process that can be time-consuming, the payfac effectively “rents out” merchant account functionality under its larger master merchant. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. Merchant of record vs. Understanding Payfac vs Merchant of Record. They are then able. For. The MoR is responsible for processing customer payments on behalf of the business, taking on numerous legal and financial. Merchant of record vs. Fast forward to today, Lightspeed has become a payment facilitator (“payfac”) under its ‘Lightspeed Payments’ offering. A merchant of record is an entity that is legally authorised and responsible for processing customer payments – here's what businesses should know about it. payment facilitator (payfac) MoRs and payfacs both play significant roles in the e-commerce payment process, but their responsibilities and the scope of their services differ. Becoming a Payment Facilitator or PayFac is often a great fit for SaaS platforms that in addition to a business management app also offers a payment processing solution as well as payment specific solutions, e. Payment facilitation, or PayFac allows a SaaS company to act as a master merchant for its client base. Instead of each individual business needing to set up its own merchant account, a process that can be time-consuming, the payfac effectively “rents out” merchant account functionality under its larger master merchant. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. . A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. The MoR is liable for the financial, legal, and compliance aspects of transactions. Payment facilitators (acting as the master merchant) control the onboarding process for their customers, which are referred to as sub-merchants. Merchant of record vs. 8–2% is typically reasonable. Wide range of functions. With payfacs, merchants are assigned a sub-merchant ID in which all of these sub-merchants are registered under the payfac’s master merchant account. A merchant of record is an entity that accepts cardholders’ payments and assumes liability for processing of these payments on the merchant’s behalf. Merchant account Payfacs also provide a merchant account, a type of bank account that allows businesses to accept and process electronic payments. The marketplace also manages the. As small. The payment facilitator model was created by the card networks (i. This is, usually, the case for large-size companies. Traditional payfacs have embedded payment systems and register their master MID with an acquiring bank. March 29, 2021. According to Visa's rules, the MOR is the company. 20 (Purchase price less interchange) Authorization and transaction data $97. Here’s how: Merchant of record. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. ️ Learn more about it! That wisdom of make. It’s used to provide payment processing services to their own merchant clients. Embedded Finance Series, Part 3. who do not have a traditional acquiring relationship. Payfac 45. Now that the basic idea of the merchant of record and the seller of record is clear, it is time to explore the major points of difference between them. A merchant of record (MoR) is the entity that is authorized, and held liable, by a financial institution to process a consumer’s credit and debit card transactions. Payfacs are still licensed by an acquirer and have different rules, but although they can board submerchants at will normally, they can’t take on FULL liability for the product or taxes. Fraudulent Merchant Applications Fraud Schemes Enumeration or Account Testing Schemes Force-Post Fraud Purchase Return Fraud and Purchase Return Authorizations Merchant Bust-Out Schemes 4. A good Merchant of Record solution has a robust infrastructure designed to streamline global payment processing and everything it entails, from payment gateways to merchant banks. With the payment facilitator or PayFac model, every user gets a sub-merchant ID. The MoR is responsible for processing customer payments on behalf of the business, taking on numerous legal and financial. A merchant of record is an entity that is legally authorised and responsible for processing customer payments – here's what businesses should know about it. It does this by managing the numerous responsibilities - including risk management and compliance - and relationships - including banks and card networks - necessary for payment processing on behalf of the merchant. A payment facilitator, also known as a payfac, is a provider that extends all the functionality of a merchant account to merchants without requiring them to go through the process of acquiring their own individual merchant account. A major difference between PayFacs and ISOs is how funding is handled. The MoR is responsible for processing customer payments on behalf of the business, taking on numerous legal and financial. Merchant of record vs. payment facilitator (payfac) MoRs and payfacs both play significant roles in the e-commerce payment process, but their responsibilities and the scope of their services differ. payment facilitator (payfac) MoRs and payfacs both play significant roles in the ecommerce payment process, but their responsibilities and the scope of their services differ. • The acquirer has access to Payfac system to oversee their performance and compliance. The MoR is responsible for processing customer payments on behalf of the business, taking on numerous legal and financial. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. Also known as a “PayFac” or merchant aggregator, a payment facilitator is a third party agent that contracts with an acquirer to THE ACQUIRER. Fast forward to today, Lightspeed has become a payment facilitator (“payfac”) under its ‘Lightspeed Payments’ offering. Businesses that choose to work with a payfac are essentially submerchants under this master account. Payfacs often offer an all-in-one. Clover is not a PayFac and does not own its payments platform or anything they sell. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. Pillar 1: Onboarding and underwriting The PayFac handles all of the compliance checks on new merchant applications and ensures that they are safe to bring onto the platform. The PayFac model has gained popularity in recent years, as it allows businesses to simplify their payment processing and reduce costs, while also providing a better customer experience. A merchant of record is an entity that is legally authorised and responsible for processing customer payments – here's what businesses should know about it. The MoR is liable for the financial, legal, and compliance aspects of transactions. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. A PayFac is a processing service provider for ecommerce merchants. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. The payfac part you described is clear, thanks! What confuses me is that as far as I understand, a PSP can also explore working with a BIN sponsor (an acquirer / a principle member of Visa/MC) so they dont have to get the acquiring license themselves, but in this model they can get into the fund flow since the BIN sponsor would settle to them - this is. A payment processor serves as the technical arm of a merchant acquirer. Instead of each individual business needing to set up its own merchant account , a process that can be time-consuming, the payfac effectively “rents out” merchant account functionality under its larger master merchant. 8 Data Breaches 20 PAYMENT FACILITATOR AND MARKETPLACE RISK GUIDE 1 Merchant of record vs. The MoR is liable for the financial, legal, and compliance aspects of transactions. Merchant of record vs. So, instead of applying for a unique merchant account directly with a payment processor or bank, a merchant applies with the PayFac. “The thing to understand about the PayFac model,” he said, “is that it’s not an ‘all-in’ model,” where a PayFac must offer all things to all merchants — a modular approach is best. More commonly, a PayFac will enable you to set up a sub-merchant account, making it much easier to set up an account and begin accepting customer payments. With a Payfac, it is easy for the merchant to get niche treatment because the software determines the structure, eliminating the need for laborious documentation. , invoicing. The main difference between these two technologies, the Payment Facilitator and the Payment Processor, is the difference in the organization of merchant accounts. Understanding Payfac vs Merchant of Record. Merchant of record vs. While we’ll discuss costs below, PayFacs can onboard merchants much more quickly than a traditional ISO model. They operate as mini-processors and can process transactions, underwrite sub-merchants, manage disputes, and make payouts to sub-merchants. Merchant of record vs. The merchant of record is responsible for maintaining a merchant account, processing all payments. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. The name of the MOR appears on the receipt that the customer (cardholder) receives, which may differ from the name of the product seller. com 1) A PayFac always acts on sub-merchant’s (retailer’s) behalf, while an MOR might be the actual retailer. If your sell rate is 2. PayFacs are generally more suitable for smaller businesses or those looking for a streamlined, integrated payment platform with faster funding times. In simple terms, the MOR is. The difference between a payment processor and a payment gateway lies in the fact that one—payment the processor—is the service provider facilitating the transaction, while the other—the payment gateway—is the communication channel responsible for securely transmitting the payment data to the payment processor and credit card networks. A payment processor receives the initial authorization request when the card is swiped to make a purchase. The MoR is responsible for processing customer payments on behalf of the business, taking on numerous legal and financial. ) are accepted through the master merchant account. Instead, the payfac has a master merchant account that it uses to process payments for all the “sub-merchants. The main difference between a payment aggregator and a PayFac is the type of merchant ID (MID) used to differentiate accounts. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. The PayFac aggregates transactions and sends them to its processor, keeping operations streamlined. By being delivered digitally vs. There are several benefits to this model. In the case of Merchant of Record (MoR), the services provider is responsible for financial activities e. platforms vs. Seller of record vs merchant of record. In this article we are going to explain why payment facilitator model is becoming so popular (attracting more and more entities) while ISO model is gradually dying out, vacating the space for new payment facilitators. The Visa® merchant aggregation model covers all commerce types, including the face-to-face and e-commerce environments, and helps to increase electronic payment acceptance for merchants. This was around the same time that NMI, the global payment platform, acquired IRIS. payment facilitator (payfac) MoRs and payfacs both play significant roles in the ecommerce payment process, but their responsibilities and the scope of their services differ. By aggregating multiple merchants under one master account, PayFacs allow these businesses to accept payments without establishing their merchant accounts. It’s important to look for a payfac that has a strong track record of security and compliance and has implemented measures such as. ” In other words, instead of setting up merchants to process payments with their own unique accounts, a PayFac is like an aggregator, where the Main. As your clients conduct credit and debit card payments, the funds from each payment are saved in your merchant account. The MoR is responsible for processing customer payments on behalf of the business, taking on numerous legal and financial. A payment facilitator (payfac) is a type of merchant services provider that simplifies the payment process for businesses. Surely, the payment facilitator model promises added revenue from each transaction your software processes, however, it demands capital and time. PayFacs are models where the service provider (e. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. As part of the agreement, the PayFac obtains the right to onboard sub-merchants. In contrast, with a PayFac, the customer will almost certainly interact directly with the individual sub-merchant, and in some cases may not even know that a PayFac is involved in the transaction. Traditional payfacs have embedded payment systems and register their master MID with an acquiring bank. A Payment Facilitator or Payfac is a service provider for merchants. A relationship with an acquirer will provide much of what a Payfac needs to operate. The term “merchant of record” refers to the entity that is legally authorized and responsible for processing customer payments —including credit and debit card transactions and digital wallet transactions —for goods or services on behalf of a business. A merchant account is issued directly to the merchant by the acquirer. Merchants undergo a series of evaluations before they are onboarded as sub. Here's how: Merchant of record A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. Rather then setting up each of their clients with their own merchant account, the Payfac lets them piggyback on the Payfac’s account. A PayFac will smooth. A PayFac, or payment facilitator, is a merchant services model that streamlines the merchant account enrollment process by onboarding a merchant as a sub-account under the PayFac’s master account. To manage payments for its submerchants, a Payfac needs all of these functions. Merchant of record vs. payment aggregator. As merchant numbers and workflow complexity grows, using white-labeled PayFac-as-a-Service can set your ISO apart. payment facilitator (payfac) MoRs and payfacs both play significant roles in the ecommerce payment process, but their responsibilities and the scope of their services differ. It enters a contractual agreement with its customer, the PayFac, which is the master merchant. In simple terms, the MOR is the name that the customer (cardholder) sees on the receipt. Our belief is that the logic behind these double standards is that a merchant-of-record carries the liability and compliance responsibility in an ecosystem that is all the same. Payfacs work by having a master merchant account (and a master MID) through its relationship with acquiring banks. By enabling service providers to act as the payment facilitator (also known as the “merchant of record (MoR), PFAC, or PayFac”) and onboard numerous submerchants under the PayFac structure, the payment facilitator can bring on many submerchants efficiently and without the typical friction involved in the underwriting and onboarding. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. Here’s how: Merchant of record The Visa® merchant aggregation model covers all commerce types, including the face-to-face and e-commerce environments, and helps to increase electronic payment acceptance for merchants. An ISO is a third-party company that refers merchants to acquiring banks or payment service providers. A SaaS company that wants to offer its users the ability to accept card payments, needs to first obtain a payment facilitator (PayFac) account from an acquirer. A payment facilitator (payfac) is a type of merchant services provider that simplifies the payment process for businesses. The risk-sharing model provides financial protection against chargebacks and fraud. Also known as a “PayFac” or merchant aggregator, a payment facilitator is a third party agent that contracts with an acquirer to THE ACQUIRER. Sub-merchants, on the other hand. Many ISOs already have the resources and. With Punchey, you are the merchant of record. Settlement must be directly from the sponsor to the merchant. The term “merchant of record” refers to the entity that is legally authorized and responsible for processing customer payments —including credit and debit card transactions and digital wallet transactions —for goods or services on behalf of a business. What is a payment facilitator, or PayFac? A PayFac is an organization that processes payments on behalf of merchants A payment facilitator is a merchant-service. A Payfac provides PSP merchant accounts. Facilitates payments for sub-merchants. 5%. PayFacs operate as a master merchant that facilitates credit and debit card transactions for sub-merchants (the PayFac customers) within their payments ecosystem. Instead of each individual business needing to set up its own merchant account , a process that can be time-consuming, the payfac effectively “rents out” merchant account functionality under its larger master merchant. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. Why PayFac model increases the company’s valuation in the eyes of investors. The PayFac directly manages the payment of funds to sub-merchants. A merchant of record is an entity that is legally authorised and responsible for processing customer payments – here's what businesses should know about it. An MoR acts as a payment processing service that is essentially a reseller of the merchant’s goods or services, and a payfac assumes responsibility for establishing and managing the relationships that the merchant needs to start taking payments. Merchant of record vs. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. The PayFac owns the direct relationship with the payment processor and acquiring bank. PayFac vs merchant of record vs master merchant vs sub-merchant. The PayFac does not have to underwrite all merchants upfront — they are instead, underwriting the merchants essentially as they continue to process transactions for them on an ongoing basis. Each of these sub IDs is registered under the PayFac’s master merchant account. PayFacs provide a similar service to standard merchant accounts, but with a few important differences. The MoR is liable for the financial, legal, and compliance aspects of transactions. Pillar 2: Transaction monitoring The PayFac protects against possible fraud by monitoring every transaction that is processed through the platform. An acquirer is a bank or a financial institute that receives funds for its merchant from a shopper. Processor relationships. The reports, records, and dashboard help the. Instead, a payfac aggregates many businesses under one master merchant account. payment facilitator (payfac) MoRs and payfacs both play significant roles in the ecommerce payment process, but their responsibilities and the scope of their services differ. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. Merchant of record vs. A Payment Facilitator (PayFac) is a third-party service that lets merchants accept various forms of non-cash payments like credit/debit cards or digital payments. Here’s how: Merchant of record. A merchant of record is an entity that is legally authorized and responsible for processing customer payments—here’s what businesses should know about it. payment facilitator (payfac) MoRs and payfacs both play significant roles in the e-commerce payment process, but their responsibilities and the scope of their services differ. In this post, we break down the differences between a few of the most common routes you can take when it comes to integrated payment models: independent sales organization (ISO), full-fledged payment facilitator (PayFac), or PayFac-as-a-Service (PFaaS) models. Sub-merchants, on the other hand. The MoR is also the name that appears on the consumer’s credit card statement. What is the difference between a merchant of record and a payment facilitator? A merchant of record and a payment facilitator (PayFac) share many. One classic example of a payment facilitator is Square. Merchant of record vs. GETTRX Zero; Flat Rate; Interchange; Learn. Traditional payment facilitator (payfac) model of embedded payments. ISOs and PFs may occupy similar space, but their fundamental differences set them apart from each other. With the PayFac model, the ISV can instead offer those same users the option to become sub-merchants, reducing friction and tapping into a new revenue source – the valuable transaction fees generated by each sub-merchant sale. Estimated costs depend on average sale amount and type of card usage. Over the past several years, there has been a steady decline in the number of businesses obtaining merchant services from their local bank or acquirer and a commensurate rise in businesses getting solutions from software providers. Payfac-as-a-service vs. In this article, we explore various forms of payment facilitation, the commercial opportunity for payfacs, the maturation process of select payfac models, and the key features and functionalities to look for in PSPs. In order to provide a plausible explanation, we need to understand the evolution of the merchant services industry. Sub-merchants, on the other hand. 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. Here’s how: Merchant of record. 0 is to become a payment facilitator (payfac). The term “merchant of record” refers to the entity that is legally authorized and responsible for processing customer payments —including credit and debit card transactions and digital wallet transactions —for goods or services on behalf of a business. A payment facilitator (or PayFac) is a payment service provider for merchants. These merchant customers of a PayFac are known as “sub-merchants. PayFac: A PayFac essentially takes on some of the duties of a payment processor and a payment gateway and acts as the merchant-of-record for the acquirer, servicing its submerchants (customers). A payment facilitator allows sub-merchants under one master merchant to process payments easily, with less hassle. This model gives your users the ability to seamlessly accept payments directly from your platform and allows you to own and monetize the payments experience. Traditional payfacs have embedded payment systems and register their master MID with an acquiring bank. So, what.