What is a payment facilitator (PayFac)?
A payment facilitator (PayFac) is a company that signs up merchants as sub-merchants under its own master merchant account, instead of opening a separate merchant account for each one. Stripe, Square and Shopify Payments work this way.
How it works
Sub-merchants are onboarded quickly, often with underwriting done afterwards. Because they share the PayFac’s account, the PayFac can hold funds or close a sub-merchant as soon as it reassesses risk.
Why it matters for high-risk brands
High-risk brands usually outgrow PayFacs and move to dedicated merchant accounts in their own name, judged on their own history.
Payment facilitator (PayFac): questions
Is a PayFac the same as a merchant account?
No. With a PayFac you are a sub-merchant on its account; with a merchant account you hold your own MID at an acquiring bank.
Why do PayFacs freeze high-risk merchants?
Because they carry the risk of every sub-merchant on their account, and high-risk categories raise that risk.