What Is the Payment Facilitator Model?

Sponsored content provided by Vantiv now Worldpay

Liz Crider, Vantiv, Now Worldpay

Put simply, it’s a model for streamlining merchant services. Payment facilitators eliminate the need for individual merchants to establish a traditional merchant account.

In the payment facilitator model, a software provider registers with an acquirer to provide payment services to sub-merchants that utilize their software. By registering as a payment facilitator with an acquirer, the software provider acts as a “master” merchant account provider, boarding sub-merchants under their own account in order to facilitate payment transactions for them.

So who are the main players in the model and what are their jobs?

There are three main parties involved: The acquirer, the payment facilitator and the sub-merchant.

It’s the acquirer’s job to provide the overall structure for the operation while the payment facilitator acts as the go-between for the acquirer and the sub-merchants. The sub-merchants then operate underneath the payment facilitator.

Who’s responsible for what in the payment facilitator model?

The acquirer works with the payment facilitator to get them up and running. This includes administering an application and underwriting process, working out a pricing agreement and facilitating a payment technology integration. The acquirer is also responsible for monitoring the payment facilitator’s compliance with operating regulations and ensures due diligence when boarding sub-merchants.

The payment facilitator undergoes a comprehensive process to register with an acquirer including integrating to the payments technology and infrastructure. The payment facilitator assumes all risk and liability for their sub-merchants.

Sub-merchants sign up with payment facilitators in order to be able to accept payments from customers.

Is the payment facilitator model right for your business?

The greatest benefit of the payment facilitator model is the ability to simplify and streamline the merchant account enrollment and onboarding process by offering a complete, white-label payment processing solution.

This ultimately leads to more control over the processing experience, higher merchant conversion rates, and the opportunity to earn more revenue from credit card processing.

On the flip side, the greatest challenge is the level of responsibility the payment facilitator must assume. This includes greater liability for fraud, chargebacks, and data breaches, the resources to build or purchase payments technology, and the ability to meet compliance mandates and regulatory rules to register as a PCI Level 1 or Level 2 validated service provider.

For answers to more questions about the payment facilitator model, read the full paper here.