What is a payment facilitator? A guide to the payfac model and how to use it

Key takeaways:

• A payment facilitator (payfac) is an intermediary service that allows merchants to bring a payment service in-house.

• Payfacs can help you optimise your direct payments or offer financial services from your existing platform.

• Payfacs also help you leverage cross-border payments, reduce security issues, centralise your financial system, and monetise financial solutions.

Too often, payments are seen as backend infrastructure. In reality, they can be one of the most powerful tools for business growth. With the right infrastructure in place, businesses can navigate provider relationships, compliance hurdles, and cross-border complexities more efficiently than ever.

If you’re building a marketplace, scaling a SaaS platform, or embedding financial services into your product, there are smarter ways to simplify and scale your payment operations.

That’s where payment facilitators (payfacs) come in. Whether you need embedded finance or simplified SaaS payment processing, payfacs eases the heavy lifting – from onboarding and integration to compliance and security. The result? Faster payouts, greater flexibility, and more control over your customer experience.

In this article, we’ll break down what a payment facilitator is, how it works, and how the right solution can support your growth.

What is a payment facilitator?

A payment facilitator is an intermediary service that lets you bring payment services in-house. For platforms and marketplaces, this means you can offer payment acceptance to your users or sellers without needing them to set up individual merchant accounts. It’s a turnkey solution to payments that you can customise and deploy, reducing your setup and maintenance burden.

Rather than requiring every merchant to apply for their own merchant account, a payfac lets you hold a master account and create sub-accounts beneath it. This makes it faster and easier to onboard users, process transactions, and stay compliant.

If you start from scratch instead, you have to build relationships with multiple providers and navigate payment technologies and regulations. That’s an expensive and time-consuming process, regardless of the financial service you want to offer.

Most businesses use payment facilitators to support two core payment models:

• Integrated payments: Accept card payments, local payment methods, and offer multi-currency transactions within your product. This setup is ideal if you want to handle customer payments without sending them to a third-party provider.

• Merchant onboarding and management: Quickly onboard users or sellers as sub-merchants, manage payouts, and control how funds flow between parties. This model is common for platforms, marketplaces, and vertical SaaS tools that want to offer payments as part of their service.

How do payment facilitators work?

Payment facilitators provide merchant services that allow businesses to accept and manage payments through a single provider. While their primary service is payment processing, many payfacs also offer value-added services like fraud protection and advanced security features.

Payfacs simplify online payment or financial service implementation, so you don't have to build from scratch. When you partner with a payfac provider, they have pre-built solutions that you can customise based on your needs, making it faster and easier for you to go to market.

For platforms, this removes the overhead of managing multiple integrations and enables faster seller onboarding. Instead of building complex payout and compliance logic in-house, you can rely on the payfac’s infrastructure.

Traditional payment processing means managing separate accounts, gateways, and processors. Payfacs remove that complexity by providing a single, customisable solution. Instead of dealing with multiple vendors and integrations, you get everything you need in one place.

Payfacs allow direct payments by offering no- and low-code payment options, like payment links and embedded checkouts. They provide everything needed to process payments, from payment gateways and merchant accounts to compliance features like Know-Your-Customer (KYC) and Payment Card Industry Data Security Standards (PCI DSS).  This makes it easier to launch and scale financial services, without building the entire stack from scratch.

How do payfacs benefit businesses?

Using a payment facilitator can help you launch faster, reduce operational complexity, and unlock new revenue opportunities. The benefits depend on how you use the model, but many platforms see immediate value.

Grow globally with cross-border payments

Using a payment facilitator is one of the fastest and most efficient ways to expand your business into international markets. They support multi-currency transactions and help reduce friction at checkout by enabling local payment methods. For example, Airwallex allows businesses to accept payments in over 180 countries, supporting bank transfers, direct debits, and popular digital wallets.

While the complexity can vary, many payfacs are easy to implement, especially for businesses with straightforward payment needs. They also provide robust APIs and SDKs to support integration with your existing stack. For more complex requirements, the process might involve more technical setup, but the right payfac will be able to support your specific needs.

Reduce compliance and security burdens

Managing online transactions requires compliance with international and local payment processing and security regulations. A good payfac adheres to changing regulations, ensuring compliance no matter where you operate. This includes:

• Payment Card Industry Data Security Standard (PCI DSS)

• Tokenisation and encryption

• Know Your Customer (KYC) and Anti-Money Laundering (AML) checks

• Fraud prevention and identification measures

Meeting these regulations and security standards protects your business from expensive fees and penalties for non-compliance while also protecting you and your customers from fraud and data breaches.

Monetise financial solutions

Payfacs can offer white-label solutions, allowing you to brand the payment process as your own. This enhances your customer experience while allowing you to decide which parts of the process to monetise. For platforms, this means turning payments from a cost centre into a revenue stream, whether that’s through FX markups or payment processing fees.

All of this comes with automated fund flows and a simplified onboarding experience. You can avoid lengthy setup times and complex paperwork while ensuring compliance with global regulations like Know Your Customer (KYC) requirements.

How to adopt a payment facilitator

Start by defining your payment goals. You might want to reduce transaction costs, simplify global payments, or offer embedded financial services to customers.

Then, compare payment providers based on their features, compliance support, and pricing to find the best fit for your business.

Evaluate the ease of implementation and weigh that against the type of support you have in-house. If you're using a payfac for direct payments, you'll integrate their tools for easy processing. If you're embedding financial services, you'll need infrastructure that supports sub-merchants, multi-currency accounts, and compliance automation.

When supporting direct payments in-house:

1. You partner with a payment facilitator of your choice.

2. The payfac provides the software and services you need to manage payments, which may include payment gateways, processors, and merchant accounts.

3. You customise embedded checkouts and other customer-facing features according to your brand.

4. Launch the payment integrations to begin accepting payments.

5. Monitor expense and financial management with built-in tools.

The embedded finance model is more complicated and may require development support.

When offering financial services to your platform users, or sub-merchants:

1. You partner with a payment facilitator of your choice and identify the financial service you want to offer.

2. The payfac provides the infrastructure and pre-built flows to offer the service.

3. You customise the branding and user interface (UI) of the white-label infrastructure using developer tools, APIs, and internal resources.

4. Launch the financial service and begin supporting sub-merchants for a fee.

5. Collect and monitor analytics to inform your business decisions.

Streamline payment acceptance with a globally trusted payfac

Choosing the right payment facilitator isn’t just about processing payments. It’s about driving growth, simplifying operations, and giving your business the tools to scale internationally.

With Airwallex, businesses can take control of eCommerce payment processing, offer multi-currency accounts to sub-merchants, and support diverse local and international payment methods – all from a single platform. This means faster transactions, fewer cart abandonments, and a frictionless customer experience worldwide.

Unlike traditional providers, Airwallex offers a fully integrated financial ecosystem, including global payment acceptance, FX optimisation, and embedded financial services.

By eliminating the complexity of cross-border transactions and reducing costs, Airwallex empowers businesses to expand internationally without the usual operational roadblocks.

Payment facilitator frequently asked questions

What is the difference between a payment facilitator and a payment processor?

Payment processors focus on securely transmitting encrypted payment data between banks to authorise transactions and move funds while payment facilitators, ogive merchants more direct control over their accounts and ease the entire payment experience.

What is the difference between a payment facilitator and an acquirer?

A payment facilitator supports the payment process by overseeing the multiple platforms involved, working with an acquirer to accept payments, and offering features like fraud prevention and data reporting tools. Meanwhile, an acquirer is a financial institution that provides a merchant account so you can process and collect online payments. The acquirer is a member of card networks, like Visa, and assumes responsibility for payment security, including accepting the risks of chargebacks and fraud.

What are the risks of payment facilitators?

The risks of payment facilitators include higher transaction fees, delayed fund transfers, account holds or freezes due to fraud prevention, less control over security and compliance, limited customisation, reputation risk, and potential service disruptions. That’s why it’s important to choose a trusted provider so you can reduce risk while scaling with confidence.

Is Airwallex a payfac?

Yes, Airwallex is a global payfac. We provide the infrastructure for businesses to accept payments, onboard merchants, and offer embedded financial services – all while managing compliance and risk behind the scenes.

Disclaimer: This information doesn’t take into account your objectives, financial situation, or needs. If you are a customer of Airwallex Pty Ltd (AFSL No. 487221) read the Product Disclosure Statement (PDS) for the Direct Services available here.